Grand Committee

Wednesday 12th June 2013 Grand Committee

Wednesday, 12 June 2013.

15:45

[The Deputy Chairman of Committees (Lord Bates)]

My Lords, in the unlikely event of a Division in the House, the Committee will adjourn for 10 minutes.

Education (Amendment of the Curriculum Requirements for Second Key Stage) (England) Order 2013

Wednesday 12th June 2013 Grand Committee

Considered in Grand Committee

15:45

Moved by

[Baroness Garden of Frognal]

That the Grand Committee do report to the House that it has considered the Education (Amendment of the Curriculum Requirements for Second Key Stage) (England) Order 2013

Relevant document: 2nd Report from the Joint Committee on Statutory Instruments

[Baroness Garden of Frognal]

I thank noble Lords for the opportunity to debate the Government’s proposals for the introduction of compulsory foreign language teaching into primary schools in England. As noble Lords will know, the study of languages is currently a compulsory national curriculum subject in maintained schools in England at key stage 3 only.

In January 2011, the Government launched a review of the national curriculum in England. After consideration of evidence from competitor nations, advice from subject experts and responses to the review’s call for evidence, the expert panel advising the review recommended that the teaching of languages should be introduced at key stage 2. Following this, in June 2012, my right honourable friend the Secretary of State for Education confirmed that it was the Government’s intention to include the teaching of foreign languages at key stage 2 and, in doing so, build on the good work that many primary schools are already doing, and bring us into line with practice in many other countries.

I will say something about why we think this change is essential. Learning a language benefits individuals’ social and economic prospects and the economy more widely. It improves the mind, provides an opening to other cultures and deepens our understanding of the world. It is one mark of an educated person and we want all children to develop confidence and enjoyment in being able to speak another language early in their school life.

It is a sad fact, however, that the state of languages teaching in secondary schools has been in decline for a number of years. One sign of this can be seen in the fall in the numbers of those taking languages GCSEs. It is startling to note that the proportion of the cohort entering for at least one modern foreign language GCSE has declined from a high of 79% in 2001 to 40% in 2011. Other evidence also points to a decline. For example, the 2012 European Survey on Language Competences highlighted the poor state of languages ability among school pupils in England. Specifically, in the first taught foreign language, England had significantly more pupils at the lower proficiency levels and significantly fewer at the highest levels than our European counterparts.

We are committed to changing this situation and improving the teaching of languages. The English baccalaureate performance measure has already started to address the number of pupils studying languages at key stage 4. We believe that introducing languages earlier will improve take-up further still and also help pupils to achieve higher levels of performance at GCSE level and beyond.

We recognise the importance of making foreign languages compulsory at key stage 2, as recommended by the expert panel appointed to advise the national curriculum review. There is evidence that suggests that children are better able to learn the sounds of new languages when they are younger. We have also taken into account previous recommendations, made by Lord Dearing, that the teaching of foreign languages should be compulsory at key stage 2, and the similar conclusions of Sir Jim Rose’s review of the primary school curriculum conducted under the previous Government. Learning languages at an early age also helps general cognitive development. Researchers from University College London in 2004 found that learning other languages altered grey matter—that is, the area of the brain that processes information—in the same way that exercise builds muscles.

We have also taken into account the international evidence that shows that many other jurisdictions recommend the teaching of foreign languages in the primary phase. Indeed, evidence from Europe shows that many countries start a compulsory second language much earlier than at age 11. In Austria, France, Norway and Spain, for example, pupils will have started to learn a second language by the age of seven. We also considered evidence from secondary schools, which told us how difficult it is to plan languages teaching for their new intake that builds on what they may have been taught in primary school. This means that in some circumstances teaching is not built on effectively when pupils start secondary school.

We were encouraged by the recent CfBT Language Trends survey, in which 97% of primary schools reported that they were already teaching a language. The same survey found that more than 80% of primary schools were reasonably confident about meeting the statutory key stage 2 language requirement from 2014. It is uplifting to see examples such as St Paul’s primary school in Brighton, a leading school for the teaching of Spanish, which is taught from reception to year 6.

All pupils should enjoy the benefits of learning a language for at least four years during their primary education, which will enable them to make significant progress. We also believe that making languages compulsory at key stage 2, underpinned by a statutory programme of study, will give secondary schools a much more secure base on which to build.

We have sought views on this proposal both through the national curriculum review call for evidence and a specific consultation exercise on making languages compulsory at key stage 2. Responses on this issue in both exercises were overwhelmingly positive. The large majority of respondents to the consultation—more than 90%—agreed with the Government’s intention to introduce foreign languages at key stage 2. Their arguments included the view that young children have a natural disposition for learning languages. They claimed that making the subject compulsory was important to ensure its place in the curriculum of all schools. They also argued that doing so would lead to better attainment at key stage 3, and greater take-up at key stage 4, and that pupils would benefit from a more global outlook and enhanced career prospects.

Only a very small proportion of respondents—3% —opposed the proposal. Their key argument was that languages should not be a priority for this age group compared with other subjects such as literacy, numeracy and science. The majority of respondents, however, were of the opinion that all children benefited from learning a foreign language and that it widened opportunity.

In November last year, we therefore announced our decision to proceed with the necessary legislation to make languages compulsory at key stage 2. As noble Lords may be aware, on the same date we sought views on a proposal to require primary schools to teach one of the following languages at key stage 2: French, German, Italian, Mandarin, Spanish, Latin or ancient Greek. Responses to this second consultation were divided, but the matter for debate today is whether we should make foreign languages a statutory subject at key stage 2. A separate order will be laid subsequently on the proposed list of languages.

We also published, in February this year, a programme of study for key stage 2 languages in draft, along with one for key stage 3. These programmes set out the purpose and aims of study, as well as the subject content to be taught. The intention behind them is that children should enjoy learning a language, with the goal of being able to speak it with increasing confidence and fluency, and finding ways of communicating what they want to say. Having the confidence and ability to use a foreign language for their purposes, as well as for academic study, is very important. We have been extremely encouraged by the very positive response with which these programmes of study were greeted. Our belief that they will provide a challenging, rigorous and appropriate standard has been supported by many respondents.

On the implementation of the proposal, we are carefully considering the responses to the recent consultation on the Government’s wider proposals for reform of the national curriculum. This included a specific question asking for views on the support that schools will need to implement the new national curriculum. Clearly, system leaders, such as teaching schools and national support schools, will play a key role. We are also working with subject associations, publishers and others to ensure that high-quality support is available.

As my honourable friend the Parliamentary Under-Secretary of State for Education and Childcare said in her speech to the National College Fellowship Commission last month, the implementation of this edition of the national curriculum will be unlike previous revisions. There will be a much greater emphasis on freeing up teachers from central government prescription to enable them to make these reforms work in their schools.

Language teaching requires expertise both in using the language and in age-appropriate pedagogy. Many primary schools have already successfully addressed these needs. Making languages compulsory at key stage 2 will build on this good base and on the investment made by previous Governments to support primary languages teaching.

We recognise that training and continuing professional development will, of course, be important, particularly with the new emphasis on written as well as spoken language, but needs will vary from school to school. The Government, therefore, believe as a general principle that schools themselves are best placed to decide what arrangements they need to put in place to support their staff to deliver the new national curriculum.

Making foreign languages compulsory at key stage 2 is a hugely significant step, and one that has and will attract widespread support from the teaching profession and employers. Many primary schools have already made significant progress towards providing languages in key stage 2. Once we have completed the analysis of the responses to the consultation exercise and reflected on the feedback received, we will publish what we intend to be final versions of the new programmes of study. Subject to the will of Parliament those programmes of study will be confirmed in the autumn. I believe that the reforms that we are making will be crucial in helping to improve the standard of languages teaching in England. I therefore commend the order to the House.

[Baroness Jones of Whitchurch]

My Lords, I thank the Minister for her explanation of the order. I should make it clear from the outset that we are not in principle opposed to the requirement to teach a foreign language at key stage 2. In fact, the previous Government led the way on this and were already legislating for it in the Children, Schools and Families Act 2010 when the then Opposition refused to support it in the run-up to the general election. If our proposal on the primary school curriculum had been allowed to continue, modern foreign language teaching in primary schools would have been compulsory from 2011; it will not now be compulsory until September 2014.

The order is set against the backdrop of much broader curriculum changes that have been subject to detailed debate and criticism both in your Lordships’ House and in the wider education world. While I am sure that the noble Baroness will be pleased to hear that I do not intend to repeat all those concerns today, some of them are specific to this discussion and I shall address those now. First, the whole process of curriculum reform has been marked by secrecy and a lack of transparency, which is equally true of the foreign language proposals. The Government have carried out two consultations on this issue but the responses were available only when sought by a freedom of information request, so we have to take the summary in the Explanatory Memorandum on trust. Nevertheless we were pleased to see that the vast majority of respondents supported the change in principle.

However, we share the fundamental concerns also identified in the memorandum about the prescriptive list of languages to be taught. It is not at all clear how the list was drawn up and what the evidence base was to determine that these and no other languages should be taught. Why not, for example, include Bengali, Hindi or Arabic, or other languages with strong roots in local communities? I was a school governor a decade or two ago in a south London school with a strong local Portuguese community. Why should that school not be able to benefit from the advantages of pupils who already have some bilingual knowledge in their classroom? I appreciate that the specifics are subject to a separate order and will take note of the Minister’s justification of the list, but I would like to return to this later.

Secondly, we are concerned that the current broad aims of learning set out in the old curriculum are being replaced by a much narrower concentration on pupils acquiring core knowledge. We are concerned that this will have an impact on the way in which any foreign language is taught, will militate against developing a love and respect for other languages, and will be replaced by a more formulistic count of words and phrases that have to be memorised. With a technical emphasis on learning in the curriculum, there appears to be a lack of understanding of the wider benefits of intercultural understanding, access to a global community and greater transferrable skills, although I was pleased to hear the noble Baroness making some references to those issues in her introduction. Can she provide any insight into the teaching guidance that will be given to language teachers to ensure that pupils learn in a broad global context?

16:41

Thirdly, we are concerned at the tight timetable proposed for the implementation of the changes. I would like some further reassurance that this has been thought through. What assessment has the department made of the capacity of primary schools to recruit sufficient suitably qualified staff to teach a language by September 2014—or will it be the case, as I suspect, that it will be added on to the teaching portfolio of existing non-specialist staff?

Has any thought been given to the adverse effects of teaching a language badly? I speak with some painful personal memories in this regard, having been in a French class for three years that consisted of collectively being played audiovisual tapes. Needless to say, it was rather too late to take any remedial action by the time it was realised how little any of us had learnt over that period. I have to say that maybe my grey matter has suffered as a result of not learning that language at that time. Will the Minister clarify what steps are being taken to boost the number of language teachers prior to September next year to ensure that potential teaching programmes and materials are in place and to guarantee that quality specialist teaching exists from day one?

The recent Ofsted report on modern languages acknowledged that significant progress had been made under the previous Government, and that there was a commitment of senior leaders to introduce modern languages in primary schools. Again, the Minister made reference to that progress. However, it also recommended that the department should consider how best to support, both nationally and locally, the effective consolidation of modern languages and increased liaison with secondary schools to provide continuity of learning. How has the department responded to that challenge?

Meanwhile, the Education Minister in the Commons, Elizabeth Truss, in reply to a recent Question about the availability of resources to help with the new curriculum, was quoted as saying that schools were best placed to decide what teaching resources and professional development met their needs and that it was down to them to identify their priorities. Again, I think I heard an echo of that comment in the Minister’s introduction. I have to say that that feels rather like passing the buck, given that these changes will be a requirement on all maintained schools. I hope that the Minister can give a slightly more encouraging response about the scale of support that will be provided centrally.

In conclusion, I repeat a point that has been made repeatedly in other contexts: if the teaching of a foreign language at key stage 2 is important to the Government, how can it be right that a proportion of children, including those who attend academies, free schools and independent schools, are outside the scope of these proposals and therefore unaffected by the changes?

I have focused my comments today on the principle and practicalities of introducing a language teaching requirement at key stage 2. However, as I have made clear, we have considerably more concerns about the specific list of languages that are being proposed and which will be dealt with in a separate order to follow. We reserve our position on this. In the mean time, I look forward to hearing the Minister’s response to the points that I have raised today.

[Baroness Garden of Frognal]

I thank the noble Baroness for her response on this. The number of participants in today’s debate means that we must regard this as quality rather than quantity. I appreciate the dialogue that we have sometimes over these matters outside the Chamber, which helps us come to better responses.

On the point about secrecy and transparency, the first consultation report on introducing statutory language teaching was published on the DfE website on 16 November 2012, and responses continue to come in. The consultation report was published on 7 February 2013 together with the draft programmes of study, and the consultation report on the programmes of study will be published in due course. I assure the noble Baroness that we have made every effort to ensure that there is no secrecy on these matters, and that the information is available and people’s contributions have been welcomed.

The noble Baroness mentioned the choice of modern languages; we both recognise that that is not the subject of this instrument. The list of modern languages proposed reflects the languages that primary schools told us that they were mostly likely to teach and therefore have the expertise for teaching. Mandarin is particularly important to our future economic success. Latin and ancient Greek were added because they provide an important foundation for a number of foreign languages. We recognise that the list will provoke debate. My right honourable friend has received representations on behalf of a number of languages that are not included, including Japanese and Hebrew, is considering those representations carefully and will take all the points raised into consideration before putting the order in place.

Of course, we are not preventing any school from teaching any language it wants to. All children should have opportunity to learn one of the major world languages on the proposed list; it may, for example, be a language that they already learn at home or, as the noble Baroness has said, a language which is prevalent in the particular school. There is no restriction on that.

The noble Baroness mentioned academies. Although there is no specific regulation for the academies to teach a language, they will fall under the same regulations about teaching a balanced curriculum as other schools. It is unlikely that parents of children at an academy would not insist, if the academy were not offering a language, that it should be part of a balanced curriculum. Again, however, we will monitor that.

The noble Baroness mentioned the effectiveness of teaching of foreign languages. I agree that, again, we must ensure that we keep up with this. I assure her that her grey matter does not seem to be in short supply due to her language learning. There is of course now a great deal of technology which can assist with the teaching of languages; although I recall as a one-time language teacher being faced with language labs; there only ever seemed to be one person in the school who knew how to work them and they were almost inevitably on the far side of the sports pitch. Some technologies have not been as useful as others. These days, however, there are some exciting developments for helping to teach modern languages, but they are no substitute for a good teacher.

We know from the recent annual reports that the majority of schools already have good practice and good teachers, but that is not to say that the recruitment of new teachers with relevant expertise will not also be important. We will continue to prioritise attracting foreign language graduates to the profession through bursaries and working with professional bodies to try to ensure that modern language graduates see teaching as an excellent career choice. We will work closely with subject-specific expert groups to ensure that primary-level standards will be maintained. I repeat my acknowledgement of the work of the previous Government in increasing modern languages at particular stages in schools. We are building on that.

We recognise that in certain situations it may be appropriate for the Government to consider what we can do to facilitate the provision of support to ensure high-quality teaching in key subjects. We will continue to monitor that. The National College for Teaching and Leadership has established an expert group, chaired by a leading primary head teacher, which has been meeting to develop the sign-posting of resources, to identify high-quality teaching materials that are freely available and looking at ways in which initial teacher trainers and schools could best prepare for the introduction of key stage 2 languages. We will be considering the group’s recommendations carefully as we prepare for implementation of the new national curriculum from September 2014.

The resources currently available include the Primary Languages training zone developed by CILT, the National Centre for Languages, which supports the teaching of French, German and Spanish in primary schools. We hope that the availability of staff expertise, including support from secondary schools, will encourage a greater dialogue between primary and secondary schools to ensure that there is a smooth transition for youngsters who have learnt a particular language in primary school to be able to continue, if they wish, with the same language into secondary school. In 2013, there will be initial teacher training bursaries of up to £20,000 to attract foreign language graduates. I have already mentioned our wish to attract more bright foreign language graduates.

I thank the noble Baroness, Lady Jones, for the points she has raised, and I hope that I have reassured her on some of them. I look forward to debating at a later stage the list of languages.

Motion agreed.

Legal Aid, Sentencing and Punishment of Offenders Act 2012 (Referral Fees) Regulations 2013

Wednesday 12th June 2013 Grand Committee

Considered in Grand Committee

16:10

Moved By

[Lord Newby]

That the Grand Committee do report to the House that it has considered the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (Referral Fees) Regulations 2013

Relevant documents: 2nd Report from the Joint Committee on Statutory Instruments

[Lord Newby]

My Lords, these regulations concern the ban on referral fees introduced by the Legal Aid, Sentencing and Punishment of Offenders Act 2012. They make provision for the implementation of the ban in two specific areas. First, they provide for the ban on referral fees to apply to certain types of financial services firm—namely, those in the insurance sector. Secondly, they provide for the enforcement of the ban, as it applies to financial firms, by the Financial Conduct Authority.

I turn first to the rationale for the ban. In late 2008 Lord Justice Jackson was commissioned to undertake a review of the rules and principles governing the costs of civil litigation in England and Wales and to make recommendations to promote access to justice at proportionate costs. His report set out a number of proposals to tackle the disproportionate costs of civil litigation. In responding to these proposals the Ministry of Justice included provisions to ban referral fees in relation to personal injury cases in the LASPO Act 2012. Referral fees are typically paid by solicitors to third parties who refer business to them. Most personal injury claims are referred to solicitors by claims management companies. However, other parties, such as insurers, are also often involved. In cases where policyholders contact insurers to make a claim on their motor insurance policy, the insurer may check whether there is a related personal injury claim and refer the policyholder to a lawyer in return for a fee. If the case is successful, the lawyer’s costs, including the referral fee, would be recovered from the losing defendant. In many cases, the losing defendant could be another insurance company.

Referral fee payments have increased from around £250 per case in 2004 to around £800 per case in 2009. Both the Law Society and the Association of British Insurers raised the concern that the circular flow of money generated by referral fees incentivises and rewards making claims and therefore inflates the cost of claims and ultimately insurance premiums. According to the ABI, the average insurance premium increased by approximately 10% from 2009 to 2010 in order to make up for insurance underwriting losses of over £2 billion in 2010, when 20p was lost in every £1 of premium earned.

Lord Justice Jackson recommended that the payment and receipt of referral fees should be banned. A ban discourages lawyers from bringing unnecessary claims for compensation, including unmeritorious lower-value claims, while reducing the overall level of legal costs in personal injury cases and related insurance costs. The Ministry of Justice took forward Lord Justice Jackson’s recommendations. Rules against referral fees in personal injury cases were included in the LASPO Act 2012. The rules cover both the payment and the receipt of referral fees. The ban captures all the main businesses involved, such as solicitors, claims management companies, insurers and insurance intermediaries. Under the provisions of the 2012 Act, the individual regulators in each sector are required to effectively enforce the ban. For regulated financial services firms, the relevant regulator is the FCA.

I will now explain the specifics of the regulation. The provisions in Sections 56 to 60 of the LASPO Act 2012 introduce rules against the payment and receipt of referral fees for legal services in relation to personal injury cases. The ban on the payment and receipt of referral fees generally came into effect on 1 April.

16:15

The 2012 Act confers two main powers on the Treasury that are exercised through these regulations. The first relates to the scope of the ban. The ban on referral fees applies only to financial services firms of a type described by the Treasury in regulations. The regulations specify the financial services firms to which the ban on referral fees applies. The ban is applied to those primarily conducting insurance and insurance mediation or those in the same group as such persons. The second relates to the monitoring and enforcement of the ban. The 2012 Act provides for the Financial Conduct Authority to be the regulator for financial services firms. It allows the Treasury to adapt the existing regulatory powers of the FCA to this new regulatory function.

The FCA has existing powers under the Financial Services and Markets Act 2000 to supervise, monitor and enforce regulatory requirements imposed on financial services firms. These regulations provide the FCA’s existing powers of monitoring and enforcement to be applied, with appropriate modifications, to the ban on referral fees. This will enable the FCA to use those powers to enforce the ban. For example, it can impose financial penalties where a firm breaches regulatory rules under the Financial Services and Markets Act 2000. These regulations provide for the FCA to be able to use the financial penalties power where a financial services firm breaches the rules against referral fees.

Another example is provided in investigatory powers. Under FiSMA, the FCA can require financial services firms to provide it with information where this is relevant to the authority’s functions under the 2000 Act. These regulations allow the Financial Conduct Authority to use this power to require information to be provided where this is relevant to enforcing the ban against referral fees, as it applies to financial firms.

The ban on referral fees will apply to those conducting insurance and insurance mediation and those in the same group as such persons. It will mean that insurers and insurance brokers are likely to incur compliance costs related to ensuring that they are not in breach of the ban. Firms can also expect to be subject to monitoring by the Financial Conduct Authority and enforcement action where breaches are identified. The FCA has published a one-minute guide for firms affected by these regulations on how it will supervise the ban on referral fees in relation to financial services firms. Supervision of the financial sector’s compliance with the ban will form part of the existing supervisory regime of the FCA. For those reasons, I commend the regulations to the Committee.

[Lord Beecham]

My Lords, today is perhaps the first bite of the regulatory apple in as much as the noble Lord, Lord Hodgson, has a Question on Monday, to which the Minister will be replying, on the impact of this measure on the introduction of alternative business structures. We will no doubt be returning to that aspect later.

I am always impressed by how the Government rely on Lord Justice Jackson’s report, except when it comes to his very strong assertion that legal aid should have remained intact. It is a very selective approach—we are moving from apples to cherries in terms of our botanical analogies. Having said that, we have no objection to a ban on referral fees in general, although I am bound to say that I was a little surprised that my noble friend Lady Hayter reported to me that in her experience in the consumer world, in which she is heavily engaged, consumers apparently very much like the referral fee system and going through a referring body to solicitors. It was rather a surprise and, perhaps, a disappointment to me. I declare an interest as a solicitor, although now an unpaid consultant in my old firm.

Be that as it may, there were certainly abuses, particularly in claims management companies but also by the very insurance companies that have constantly pressed the Government, now successfully, on their need to reduce the likelihood of litigation by making it more difficult and more expensive for litigants to obtain justice. The limits, particularly on claims of less than £25,000 for personal injuries, will be subject to a very strict regime in terms of costs that may well make it uneconomic for solicitors to pursue them—but that, I guess, is a different matter.

The ceaseless advertising and constant cold calling from which many of us still suffer have been a nuisance. I do not know how many times I have been told that I have a claim under PPI—mind you, if I had, it does not look as though Lloyds Bank would be paying up. Insurance companies in particular and claims management companies abused their position, so we have no objection in principle to the ban.

Having said that, there are areas in which the extension was not justified, which I mentioned in debate on the LASPO Bill, as it then was—in particular, the ban on referral fees to non-profit organisations and trade unions, because they are regarded in the same light as those commercial organisations. I thought then and I think now that that equivalence does not exist, but we are where we are.

I note from the Explanatory Notes that the FCA has issued guidance notes to firms affected by the regulations. I am bound to say that I could not trace those when I looked online, but they may exist. It would have been helpful had I had them but I assume that they have been issued, as the Explanatory Notes state that they have. The noble Lord might want to check that before Monday.

It is interesting that the Legal Services Board has also issued guidance on referral fees. My noble friend Lady Hayter has copied to me a letter dated 21 August 2012 that seems to have been addressed to all approved regulators, so I suppose that that includes the Solicitors Regulation Authority, the FSA and possibly other bodies as well—the Institute of Chartered Accountants in England and Wales, or whatever. I am not sure, and the Minister may not be able to tell me today, whether the FCA guidance reflects the guidance previously offered by the Legal Services Board. I note from the Explanatory Notes that there was no consultation on this statutory instrument, which puzzles me because if the Legal Services Board pronounced some months ago, unless the FCA simply adopted its guidance, one would have thought that it would have at least consulted the Legal Services Board and possibly other bodies. I am curious about that apparent turn of events.

The Legal Services Board stated in its letter—this may reflect the substance of the question of the noble Lord, Lord Hodgson last Monday—that on the rules against referral fees in personal injury matters,

“it will be important to ensure that such rules do not go beyond the obligations in LASPO. That legislation bans referral fees, but does not prohibit, for example, new alternative business structures that effectively do away with the need for a referral”.

That is the Question that the Minister will be asked on Monday. It looks as though the Legal Services Board was saying at that point—admittedly, that was before the regulations were issued—that the ABS would effectively, as it states,

“do away with the need for referral”,

and therefore, presumably, for referral fees. It states:

“A liberal approach that supports the regulatory objectives of the Legal Services Act 2007, while properly delivering the legislative intent of LASPO, will therefore be crucial in making sure that both pieces of legislation are implemented effectively”.

It is not clear what its view was or now would be on the regulations, but it appears to be taking a somewhat different position from that which I suspect that the FCA and the noble Lord would anticipate.

The board went on to state that its guidance on referral fees applied across all segments of the legal market, whereas at the moment we have a ban in respect only of personal injury. That is because the ban on personal injury suits the insurance industry, and we know how influential the insurance industry is with at least one of the coalition government parties. The board states:

“In particular, regulators will need to justify any ban on the payment or receipt of referral fees that remains in place with clear supporting evidence”—

and that, in respect of personal injury, regulators will rely on the provisions of the Act—

“and to take proper account of the rest of the guidance”,

including transparency and the like. So we question, with regard to other areas of law beyond those that are the subject of these regulations, when, if at all, the referral fee ban would be extended to other areas of law. Perhaps the noble Lord could enlighten us about that—again, if not today, then subsequently.

Lest it be thought that this is a straightforward matter, there has been an interesting duel about the effect of this ban in the pages of the Law Gazette between two authors, whose names I do not have, and two QCs. The later of the two articles is from the two QCs who find that the Solicitors Regulation Authority—which is of course the primary regulatory body for the profession and will have to oversee the conduct in the situation as opposed to the operation of the ban—has been clear about how the position will work. Meanwhile, in the previous article, considerable doubt was cast on the effect of the proposed ban. I am fairly persuaded by the position that the two QCs adopt; they seem to argue their case effectively. However, this illustrates that, even here, there may be some grey areas that will provoke not further litigation, hopefully, but at least correspondence and some difficulty—particularly on the part of those involved in understanding exactly what it is that they are required to do or, more particularly, what they are required not to do on referral fees. I suspect that that matter will be included in part of the questioning that will occur on Monday.

Having said that, the Opposition do not object to the regulations. They will be reviewed over the next few years and we will see how they go. I reiterate, however, that it is most unfortunate that they extend to non-profit-making bodies, but that argument was fought and lost during the passage of the Act.

[Lord Newby]

My Lords, I am most grateful to the noble Lord for his thoughtful comments on these draft regulations. I will attempt to deal with his questions as best I might.

I have an introductory comment. The noble Lord referred to the noble Baroness, Lady Hayter, saying that the referral fee system was supported by some people. The thing that no one is objecting to is referrals. People are objecting to the fact that people are now being paid probably more than £800 on average to do it. That is a heck of a lot of cash. The problem is that it pushes up insurance payments to everyone and gives an incentive to the referrers to refer anything because they are on a winning ticket: if the case is taken up they get their fee, and if it is not then they do not lose anything. That means that there is a perverse incentive in the system for people to take cases that may or may not have huge validity, particularly when the amount being claimed is relatively small. If I am right in thinking that people like the prospect of being referred on but do not like the idea of paying fees, I would have thought that that would apply to NGOs, unions and others as well. However, as the noble Lord said, we are not discussing that principle today; the die is cast on that one.

The noble Lord asked about alternative business structures and whether they would be able to get around the ban. As the Committee knows, the Government strongly support alternative business structures to increase competition and innovation. Alternative business structures do not allow organisations to avoid the ban but allow them flexibility to operate in the personal injury market in a way that is compliant with the law.

16:30

The noble Lord asked about consultation. A general consultation was undertaken by the MoJ at the time on the Jackson recommendations as a whole, which included referral fees. The scope for consultation here seems to be very limited. It is a straightforward ban. Once it has been decided to have a ban, unlike many bits of legislation where there is a whole raft of issues surrounding implementation, this is very straightforward: just do not do it. I am not sure what more detailed consultation could have been done.

The noble Lord suggested that this might be being done for the benefit of the insurance industry. This is being done for the benefit of consumers because they then will not be paying huge fees for referrals, which we hope the professional bodies would do as part of their duty of care to their clients. I assure him that it is not being done somehow to benefit the insurance industry.

The noble Lord asked when the Government would extend the ban to other categories of law beyond personal injury. At the moment we are very much concerned with this area of referral fees, because they are the main source of claims inflation. That is why we are taking immediate action here. However, as he said, the LASPO Act 2012 includes the power to extend the prohibition to other types of claim and other legal services, should the need arise, but I am very pleased to say that that is a matter for the MoJ, not the Treasury. There is no immediate intention to move on any of that but, if I misled the noble Lord or indeed the Committee, I will write to him.

On guidance, about which the noble Lord asked, the FCA has published guidance in the form of something called a “one-minute guide”. I had never heard of one-minute guides, so I got it and will let the noble Lord have a copy. It is something that you can read in a minute; it is what it says on the tin. Because this is a very straightforward matter—just do not do it any more—it is actually possible to cover the substance in one minute, including the attitude that the FCA is going to adopt in supervising and enforcing the ban. When I sit down, I will give the noble Lord my copy of this guide, because I suspect that I will not need it again.

I hope that I have answered most of the noble Lord’s questions. With that, I commend the regulations to the Committee.

Motion agreed.

Child Support and Claims and Payments (Miscellaneous Amendments and Change to the Minimum Amount of Liability) Regulations 2013

Wednesday 12th June 2013 Grand Committee

Considered in Grand Committee

16:33

Moved By

[Lord Freud]

That the Grand Committee do report to the House that it has considered the Child Support and Claims and Payments (Miscellaneous Amendments and Change to the Minimum Amount of Liability) Regulations 2013

Relevant document: 2nd Report from the Joint Committee on Statutory Instruments

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)]

My Lords, this instrument was laid in draft before the House on 20 May 2013, and I confirm to the House that I consider it as being compatible with the European Convention on Human Rights.

The minimum amount of liability, more commonly known as the flat rate, is applied to non-resident parents whose gross weekly income is more than the flat rate itself and less than £100 per week. It also applies to all non-resident parents who are in receipt of certain prescribed benefits. The flat rate was set at £5 in 2003 and has not been uprated since. The Child Maintenance and Other Payments Act 2008 made provision for increasing the flat rate of child support for cases dealt with under the rules of any scheme established under the terms of the Act. The change has yet to be brought into force.

The increase provided for in the 2008 Act was from £5 to £7. However, because the 2012 scheme launched as a relatively small-scale pathfinder when it began on 10 December 2012, technical changes were applied to the 2012 scheme calculation regulations to ensure that the flat rate remained at £5. The flat rate for the 2012 scheme will remain at £5 for the duration of the pathfinder and will increase only once the 2003 scheme closes to new applicants. This is to ensure that all new cases will be subject to the same flat rate, regardless of whether they are directed to the 2012 scheme pathfinder or the 2003 scheme.

It is intended that the increase to the flat rate made by the 2008 Act will be brought into force later in the year, when the 2012 child maintenance scheme is opened to all applicants. This instrument makes certain consequential amendments as a result of that increase. The policy intention behind the increase is primarily that the value of the flat rate should be restored to its 2003 real value. This will reinforce the principle that parents have an obligation to support their children where they have the means to do so.

At £7, the increased flat rate will represent broadly the same value as the £5 flat rate when it began. For example, when the flat rate was introduced in 2003, £5 represented 9% of the benefit of a single person over 25 years of age on jobseeker’s allowance. The annual uprating of benefits has meant that the same £5 represents just 7% of the benefit of a single person over 25 years of age on jobseeker’s allowance. A flat rate of £7 represents 10% of the benefit of a single person over 25 years of age on jobseeker’s allowance, restoring the value of the 2003 flat rate.

The proposed flat-rate increase will also amend the percentages applied to the reduced rate of child support maintenance payable if the non-resident parent has an income of less than £200 but more than £100. This will mean that the maintenance liability of parents on the reduced rate will increase in order that the reduced rate continues to smooth increases in liabilities between the flat rate and the basic rate, which is used for those parents earning £200 or more. The Government are also committed to a wider review of the child maintenance calculation formula, with a particular focus on work incentives, once we have delivered the current raft of reforms.

The regulations before us also make miscellaneous amendments in relation to variations, which are those rules that allow for a deviation from the usual child maintenance calculation rules in certain limited circumstances. A variation could increase or decrease a child maintenance liability. For example, if a parent receives unearned income from property, savings and investments or casual earnings, this could increase their liability. On the other hand, if they incur special expenses, such as the cost of travelling to see a child, or boarding school fees, this could reduce their liability. I should make it clear that the changes contained in these regulations affect only those variations that increase liability.

The 2012 scheme is designed to work with historic income information obtained annually from HM Revenue and Customs. The changes proposed will allow that, where the information cannot be obtained electronically from HMRC, we will be able to determine unearned income by reference to information supplied by the parent in relation to the most recent tax year. This change will make for a more efficient means of obtaining reliable unearned income information and therefore allow for a more accurate calculation of maintenance liability.

In addition, the amendments will clarify that where a variation would decrease a non-resident parent’s income for child maintenance purposes to the point that their liability would fall to below the flat rate, even if the variation is agreed, the amount of maintenance that the parent will be liable for will none the less remain at the flat rate. This is in order to strike a balance between reducing liability to take account of special expenses and ensuring that children continue to benefit from some financial support. It puts children first. This will also ensure consistency between a non-resident parent who has their maintenance reduced to the level of the flat rate through a variation and a non-resident parent on the flat rate. A non-resident parent in the latter situation cannot apply for a special expenses variation.

As has always been the practice throughout the development of the 2012 scheme regulations, we have undertaken extensive stakeholder engagement. The proposed increase to the flat rate was subject to a formal consultation in 2011, and stakeholders made it clear that they believe that an increase in the flat rate to £7 is warranted. We have met stakeholder groups since that consultation, and on careful reflection we are persuaded by their arguments and have decided that the flat rate should increase to £7. We will closely monitor the regulations, along with other child maintenance policy changes, to ensure that all the activities in the new 2012 scheme are delivering the intended outcomes.

I hope that that short opening speech reassures the Committee that the changes we have proposed are sensible ones that have been developed with the aim of delivering an efficient statutory child maintenance system. These changes will ensure an appropriate increase in the amount of maintenance flowing to children. They will also make for a more efficient and accurate variations regime. I commend the instrument to the Committee.

[Baroness Sherlock]

My Lords, I thank the Minister for his introduction of these regulations. We could hardly oppose provisions enabling the increase in the flat-rate maintenance amount from £5 to £7, as they flow from the 2008 Act, which was the legislation of the previous Government. The Government were right to listen to stakeholders and to draw back from their original intent of increasing that to £10. As the Minister has indicated, the £7 figure will keep the amount at about 10% of the basic over-25s JSA rate, and the increase should therefore mean more money for children.

I understand from both the documentation and the Minister’s introduction that the regulations are not intended to come into force until the introduction of the 2012 scheme, so the utilisation of gross income in the calculation is used “for all purposes”. Perhaps the Minister could clarify that; otherwise I will have to read the record to see when exactly this is going to come into force. Is it intended to refer to the time when the 2012 scheme is open to all new applicants or the time when the 2012 scheme will have replaced the 1993 and 2003 schemes? If the latter, could he clarify now when the Government expect that to take place?

We have also heard that the regulations cover other “consequential” matters. As the Minister indicated, one of these is the revised rate calculation that applies where the non-resident parent has income of between £100 and £200. The rates in the regulations are lower than those provided for in the 2012 regulations, and perhaps the Minister could explain why. I imagine that it relates to the effect of raising the flat rate but it would be helpful if he could confirm that, as well as setting out the impact on the levels of child maintenance liability for non-resident parents earning between £100 and £200. I would be grateful if he could give some indication of the range of changes—what is the smallest and largest amount by which the future liability will differ from the past? That would give us an indication of whether they are indeed large or small in their impact. I would also be grateful if the Minister could confirm what would happen to someone earning precisely £200. Is there any danger of a cliff-edge when someone moves from below £200, where the reduced rate applies, to £200 where the standard rate will apply?

16:45

In his introduction, the Minister referred to the provisions that relate to what happens when the department cannot get information electronically from HMRC relating to historic income. Do the Government expect that use of that provision will be widespread, or is it intended to happen only in the odd case where for some reason, it does not work? That might enable him to bring us up to date, if necessary, with what is happening with RTI and related developments. We might also reflect on the regulations in the context of the letter and briefing note from the Minister dated 20 May 2013, to which he referred, which set out the Government’s updated position on the reforms to the child maintenance system. We look forward to seeing the detailed response to the consultation in due course, whenever autumn comes—although I assume that the Minister will take a seasonal rather than climatic determination of that, otherwise I expect it any day now.

It appears that the pace at which the 2012 arrangements are to be fully introduced has slowed, perhaps mirroring what has happened to the Government’s benefit reforms generally, but history reminds us of the perils of going too quickly. The Minister may want to say a bit more in his response about the experience of the pathfinder—albeit that it applies to only a small number of cases. Can he tell us precisely how many? Are the systems performing as planned? The manner in which it is proposed to deal with cases under the 1993 and 2003 schemes remains a matter of contention, with real concern that the closure of cases as planned could mean people dropping out of the system altogether, and with children being the losers, but I am sure that we will have the opportunity to return to that.

We acknowledge the announcement that no charging will be introduced until the 2012 system is open to all applicants and is seen to be working well. The announcement that the collection fee for parents with care is to be reduced from 7% to 4% is a step in the right direction, but not far enough However, most of that is for another day. If the regulations do what the Minister has described and what the Explanatory Memorandum describes, we do not have any objection to them.

[Lord Freud]

My Lords, before I aim to answer most of those questions, it is worth briefly reflecting on where we are with the rollout of the 2012 scheme. As the noble Baroness said, we began a pathfinder in December which was open to new applicants with four or more qualifying children. That has allowed us to micromanage each case so that we are confident that our system and processes will work as we intend. As the noble Baroness will know, we are adopting that structure with all of our reforms so that we are really able to see what happens as we take each person through. By definition, in the early weeks, numbers are intentionally small. We are monitoring and observing the results of that pathfinder so that when we open it much more widely it will work efficiently. I know that the noble Baroness will be as keen as I am for all those systems to work smoothly when we do them in volume.

The timing is that we will open to new applicants with two or more qualifying children—in our jargon, Commencement 2—later in the summer. We will move to all new applicants—in our jargon, Commencement 3 —by the end of 2013. It is at that point that we will increase the flat rate of maintenance. As part of our wider reforms, we are making good progress in implementing the help and support for separated families initiative.

In November 2012, we launched the Sorting out separation web app, which directs people to information and support on the range of issues that they will face after separation. We have also launched the Help and Support for Separated Families mark, which helps parents identify the organisations that they can trust to help them work together; and an innovation fund, which will test and evaluate interventions designed to help separated parents work together and reduce conflict. The first contracts in this fund have recently been awarded to seven voluntary and third-sector organisations, and will give around 280,000 separated families creative and targeted help to collaborate in their children’s interests.

Last month we tabled a Written Ministerial Statement outlining important changes to child maintenance reform. As well as the announcement of our intention to use the £7 rather than the £10 flat rate for the non-resident parent, we announced a reduction in the proposed parent-with-care collection fee from 7% to just 4%. Both changes were the product of an extended period of consultation and reflection, and we have been at pains to ensure that our changes are seen to be fair to both parents. On the outstanding question of how the £100 and £200 figures work together, the reason for the different rates is that they are on top of a different basic amount. The calculation is done not as a pure calculation but on flat rate-plus. There are some variations, but broadly it comes out at much the same level. Let us take the example of a non-resident parent with one qualifying child and no other relevant children and put them in the middle of the range at £150. The current rate would be £14.50, which is the £5 flat rate plus 19% of the £50. That comes out at 9.7% of their gross income. Moving to a flat rate of £7, the same person would pay £16.50, or 11% of their gross income. That is how the sum works. It is impossible to absorb these sums verbally, so I would be very happy to lay them out in a letter to the noble Baroness. That would make them clearer—but broadly, that is one effect.

The noble Baroness asked a very subtle question about the difference between £199.99 and £200.01. There is no cliff edge there. There are quite a lot of factors, and some little bumps here and there. Again, the easiest thing would be for me to write with a few examples so that the noble Baroness can study them on paper. However, I can say that the structure is relatively smooth and that certainly there is no cliff edge. On how widespread we are expecting this to be, where there is a glitch in the system and, for whatever reason, we cannot get a particular piece of information, we are ensuring that there is another way through. We are not anticipating large volumes on this, but one has to have it as a baseline defence. Clearly, this is a different system to RTI. This system was created rather before universal credit was a gleam in anyone’s eye. We do not have this monthly process which UC depends on. It is a different annualised process. It will be up to a future Government at some stage to look at whether it makes sense to use similar systems. However, there is no relationship whatever between the systems under UC and this.

I have dealt with all the specific issues and look forward to getting some interesting tables in a letter to the noble Baroness. I hope that today’s discussion reassures noble Lords that the changes that we have proposed are sensible and have the aim of delivering an efficient statutory child maintenance system. They will ensure an appropriate increase in the amount of maintenance flowing and will make a more efficient and accurate variations regime. I therefore present to you a set of regulations which, if approved by noble Lords, will come into force when the 2012 scheme opens to all applicants later this year. I beg to move.

Motion agreed.

Water Industry (Specified Infrastructure Projects) (English Undertakers) Regulations 2013

Wednesday 12th June 2013 Grand Committee

Considered in Grand Committee

16:57

Moved by

[Lord De Mauley]

That the Grand Committee do report to the House that it has considered the Water Industry (Specified Infrastructure Projects) (English Undertakers) Regulations 2013

Relevant documents: 2nd Report from the Joint Committee on Statutory Instruments, 3rd Report from the Secondary Legislation Scrutiny Committee

[The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord De Mauley)]

My Lords, the draft regulations before the Committee today are aimed at helping the delivery of necessary, large or complex water or sewerage infrastructure projects. They are designed to help to contain and minimise the risks associated with their delivery to customers of water or sewerage companies, known as undertakers, and also to UK taxpayers. Containing and minimising these risks should correspondingly provide better value for money associated with delivering such projects. It should also help to ensure that undertakers’ customers continue to receive the required or desired level of existing water or sewerage services.

These regulations would enable the Secretary of State or Ofwat to specify by notice an infrastructure project where either is satisfied that two conditions have been met. The first is that the infrastructure project is of a size or complexity that threatens an undertaker’s ability to provide services to its customers. The second condition is that specifying the project would be likely to result in better value for money than if the project was not so specified, taking into account charges to customers and any government financial assistance.

Once specified, an undertaker would then be required to put the specified infrastructure out to tender and a separate Ofwat-regulated infrastructure provider would be designated to finance and deliver the project. These large, complex infrastructure projects raise issues of determining the cost of their financing coupled with a construction risk that is far greater than that normally associated with an undertaker’s typical capital investment.

Enabling an undertaker to tender competitively an infrastructure provider for a large or complex project provides an objective means of testing whether the financing costs of such a project are appropriate or reasonable. Without that tendering process, competitively determining the cost of capital for those types of project would not be possible. The ability to create ring-fenced Ofwat-regulated infrastructure providers between undertakers and large or complex projects would also help to ring-fence their associated higher risks, and should result in more effective risk management for these projects.

17:00

Enabling the creation of infrastructure providers would prevent the threat of a large or complex infrastructure project affecting the ability of an undertaker to provide its day-to-day services for its customers, avoiding any resultant extra costs that would ultimately be borne to some extent by those customers.

There have been two public consultations on the regulations. An initial 12-week public consultation was carried out between February and May 2011, seeking views on proposals for new regulations. Thirteen replies were received and a summary published on Defra’s website in September 2011. The second consultation ran for four weeks between 5 November and 4 December 2012. Its purpose was to inform stakeholders representing interests likely to be affected by the proposals; it included draft regulations and a corresponding impact assessment.

The latter consultation was issued by e-mail to 73 contact addresses previously contacted for the 2011 consultation and included the Mayor of London, London MPs with a known interest, EFRA committee MPs, water and sewerage companies, Ofwat and the Consumer Council for Water. Seven responses were received and a summary published on Defra’s website in March 2013.

We have noted the range of views and comments received on the proposed legislation and relating to the proposed Thames tideway tunnel project in London. In particular, we note concerns that provision to enable separate infrastructure providers might allow undertakers to avoid obligations to provide necessary infrastructure themselves within their own financial structures, and so enable the continuation of high levels of dividend payments to shareholders.

It is important to note that the regulations would enable only the Secretary of State or Ofwat to require an undertaker in England to tender competitively an infrastructure provider. This would be only for large or complex projects that they consider would threaten an undertaker’s ability to meet its statutory service provision obligations, and where this would provide better value for money for both customers and taxpayers. This would never be a decision for undertakers, so would not provide an incentive for them to avoid their obligations.

The current water industry regulatory framework is designed so that Ofwat can regulate undertakers so that they do not make excessive payments to shareholders. Customers’ bills are kept as low as possible while recognising that the companies must attract appropriate investment to meet future needs.

Following due consideration of the public consultation, we have decided to proceed with these regulations for the reasons that I have outlined. The ability to enable undertakers to tender competitively an infrastructure provider to finance and deliver a large or complex project will be a useful tool, even if rarely exercised. Enabling the ring-fencing of important infrastructure projects will help to attract necessary private capital at a transparent and competitive price, helping to protect the interests of both undertaker customers and UK taxpayers.

I know that many noble Lords have firmly held views on the merits or otherwise of the Thames tideway tunnel and I look forward to our debate this afternoon, during which I expect that many of these views will be put forward. However, I ask the Committee to bear in mind that the regulations before it today could apply not only to the Thames tideway tunnel but to any large or complex sewer or water infrastructure projects in future. I commend the draft regulations to the Committee.

[Lord Knight of Weymouth]

My Lords, the Minister will be relieved to know that on this occasion, unlike a previous one, I will not seek to give contradictory views to represent the views of some of my colleagues on this side of the Committee. This debate comes at an inconvenient time for Thames Water but, therefore, at an opportune time for Parliament. I will make some general comments and then delve a little into some of the specifics of the Thames tideway tunnel project. In making my comments, I am grateful as ever to the Secondary Legislation Scrutiny Committee of your Lordships’ House. Its third report of this Session brings these regulations to the special attention of the Committee on the grounds that they give rise to issues of public policy likely to be of interest to us. I am particularly grateful that the Committee is willing to delegate me to take forward all those public policy issues. It is right that we should reflect on them.

As the committee points out, the Explanatory Memorandum implies that these regulations are generic and apply to all water and sewerage companies and large infrastructure projects that meet the criteria. That was clearly set out by the Minister. However, the only project to which the regulations are expected to apply over the next 10 years is the Thames tideway tunnel. The impact assessment therefore exclusively estimates the impact of the project in relation to these regulations. We have debated the tunnel before, but there are issues I would like to raise as events have moved on.

First, I will make some generic comments. The arguments put for establishing a separate body to manage the finance, delivery and extraordinary risks of major water infrastructure projects are reasonable. The example of the Thames tunnel is helpful. It will cost more than £4 billion and, while Thames Water will carry out associated investment at its own risk, the cost of the main tunnel is a considerable financial risk to put on a company with a turnover of £1.8 billion. Assuming that Thames Water is well regulated and responsible, there is logic in establishing a separate infrastructure provider to construct the tunnel and have Thames Water effectively lease it back.

These regulations then extend the reach of Ofwat to these providers, which is important to ensure that the public interest is protected. The alternatives discussed by the Minister and in the accompanying papers are to leave things as they are or to require that the project be put out to tender by the water company. Defra discounts the former because Ofwat would struggle to regulate the financial arrangements when they are bound in with the rest of the company’s activities. To some extent, I struggle to see how it can effectively regulate the general finances of a company and then the separate finances of a big project, but cannot manage to do it when they are done together. However, I am happy to believe those involved when they tell me that they cannot. I am also happy with the desirability of a separate provider over the complexity of negotiating a new licence, which is the implication of requiring the company to tender a major project. Therefore, I am happy with the regulations as they stand in the generality.

Let me then turn to the specifics of the Thames tideway tunnel and the figures in the impact assessment. I remind the Committee that I rent a flat here in London very close to one of the sites for the construction of the tunnel, so in that respect have an interest. Thames Water has also been to see me to brief—or some would say lobby—me about the project. I accept the basis of the company’s argument. The capital’s Victorian sewerage system has served the capital well, but urgently needs more capacity to meet the needs of modern-day London. The Thames tideway tunnel will ensure that the capital has a sewerage system fit for purpose for at least another century.

The tidal part of the river remains an environmental and public health hazard. It cannot be acceptable to allow the tidal River Thames to be an open sewer. Sewage discharges into the tidal River Thames breach the urban waste water treatment directive and British taxpayers would face the prospect of substantial fines if the tunnel is not built. Other world-leading cities, including Paris, Stockholm, Helsinki and Washington DC, as well as the Rhine/Ruhr conurbation in Germany, are forging ahead with similar schemes. I agree with Thames Water’s briefing that London is in danger of being left behind and facing substantial fines if we do not act.

I am happy to support the project. The benefits to employment in London should be maximised and the impact on residents minimised, and I am pleased on progress in moving more material off the roads and on to the river during the construction phase. However, I also note the recent remarks by the new chair of Ofwat, Jonson Cox. Interestingly, Mr Cox is a water industry insider. He said last week that some unlisted companies have a moral case to answer over allegations, that they,

“use shareholder loans to avoid UK taxation”,

through “complex offshore holding structures”. He said:

“A good number use high-coupon shareholder loans to improve their equity returns … It appears that this reduces tax liability for the benefit of shareholders”.

He went on:

“Tax policy is not for an economic regulator and these structures may be legal and common in private equity. But some aspects are morally questionable in a vital public service”.

Thames Water has published its annual results this week. It appears that the company pays no corporation tax on its £1.8 billion turnover while continuing to pay executives many times more than the Prime Minister. In my view, this is unacceptable—it stinks. Why should the public be reducing the risk to shareholders of Thames Water through the Water Industry Financial Assistance Act 2012, if it then uses every last trick in the book to maximise shareholder return at the expense of the UK taxpayer? Does the Minister agree that these loopholes must be addressed as a matter of urgency? The logic of allowing profit is to reward the risks, particularly of investment, but that is undermined by excessive profit, excessive executive pay and tax avoidance when Parliament and the Government are acting to reduce the risk to Thames Water customers and shareholders.

When we turn to the impact assessment, why should the taxpayer be funding an extra £5 million of regulatory cost of Ofwat in setting up these arrangements? Could we not find a way of billing Thames Water for this expense, given that Thames Water pocketed a £5 million credit from the Treasury in a year when it made £550 million in profits? Given that the chief executive, Martin Baggs, was awarded a pay rise of 5.9%, taking his basic salary to £450,000 plus a bonus of £274,000 as part of a scheme to,

“reward significant improvement in the group’s financial and corporate performance”,

as well as picking up a further £366,000 in shares next month under the company's long-term incentive plan, maybe the £5 million could be found from senior executive salaries alone. Does the Minister agree?

On the narrow question of the regulations, I am content. On the question of Thames Water fulfilling its moral responsibilities and thereby breaching the trust on which the financing of the Thames tideway tunnel is based, I am not.

[Lord De Mauley]

My Lords, this has been an interesting debate on a number of issues relating to the draft regulation and indeed to the Thames tideway tunnel. I thank the noble Lord for his views and his insightful interventions. I thank him for agreeing that the general approach we are taking is reasonable. That is perhaps the most important thing to come out of today, and it is extremely helpful. I will come back to his specific points in a moment.

As I indicated in my introduction, it is important that these regulations should be considered separately from the specific Thames tideway tunnel project in London. In summary, the regulations enable the creation of infrastructure providers regulated by the Water Services Regulation Authority, Ofwat, to finance and deliver large or complex water or sewerage infrastructure projects. They provide for the procuring, licensing and regulating of an infrastructure provider that is separate from a water or sewerage company. They set out how the Secretary of State or Ofwat can specify to which projects the regulations would apply and how they designate the company that is to become an infrastructure provider. The regulations are intended to apply to all such large or complex water or sewerage projects that may be proposed in the future, where their application would be considered to result in better value for money for both customers and taxpayers.

I turn specifically to the Thames tideway tunnel, and I think the noble Lord has already made similar points. Climate change, population growth and higher customer expectations of environmental standards and supply resilience are anticipated to require larger and more complex infrastructure than the existing regulatory regime was designed to provide for. For example, changing rainfall patterns are expected to result in wetter winters and drier summers—who would believe it after last summer?—and to aggravate water scarcity conditions in the south and the east. This may lead to an increased requirement for potentially complex arrangements for transporting water.

Moreover, heavy rainfall events are likely to become more frequent—that we can all believe. In London, these events will further strain an already overtaxed sewerage system, leading to more overflows of untreated wastewater, containing raw sewage, into the Thames. Even after ongoing upgrades to sewage treatment works and the Lee tunnel are completed by the end of 2015, just over 18 million tonnes of wastewater will enter the Thames every year from London’s combined sewer overflows when storm-water capacity is exceeded. These overflows currently occur on average about once a week and have a significant environmental impact on the river. They increase the likelihood of fish kills, create a higher health hazard for the users of the river and damage the aesthetic appeal of the Thames.

17:15

The proposed Thames tideway tunnel is an example of a large and complex high-risk infrastructure expected to be constructed within the next 10 years. It is also one of the top 40 priority infrastructure investments within the national infrastructure plan 2011. Its construction would intercept storm sewage overflows and ensure that the River Thames meets water quality objectives established by the 2006 Thames tideway strategic study, preventing deterioration and ensuring that the Thames remains at moderate status.

The works would also ensure that the UK met its legal obligations under the urban wastewater treatment directive. On 18 October last year, the Court of Justice of the European Union found the UK to be in breach of the directive in London since 31 December 2000 by failing to have adequate collection and treatment facilities in place, despite our clear commitment to major improvements to London’s sewage collection treatment systems. We are currently in contact with the Commission regarding the measures considered necessary to comply with the terms of the court judgment. The court accepted that the Thames tideway tunnel represents a solution to the problem of the collection system in London. The implication, therefore, is that the tunnel represents a means to come into compliance with the judgment. The urgency of the project is increased by the need to comply with this judgment.

The project is large, complex and high-risk. It requires engineering and construction skills that have been rarely deployed by UK water and sewerage undertakers, certainly in recent years. We consider projects such as these to be better suited for delivery under a separate and parallel regulatory regime, rather than under the existing single regulatory regime for water and sewerage undertakers.

I turn to the noble Lord’s questions. He suggested that Ofwat should be able to manage the finances of a Thames Water and a Thames tideway tunnel combined. I think the point here is that the risk profiles of a standard water company business on the one hand and of a tunnel construction project such as this on the other are significantly different. Pricing against both is, therefore, different. We feel that the tunnel is better priced as to risk in the market as it stands.

The noble Lord raised the recent comments of the Ofwat chairman. Like the noble Lord, we agree with Mr Cox that there must be full transparency in the finances of all water and sewerage companies so that Ofwat can do its job and customers can obtain any benefits resulting from cost savings. The specified infrastructure project regulations would enhance such transparency. They enable water or sewerage companies to tender competitively—as I said earlier, Ofwat-regulated infrastructure providers that finance and deliver large or complex infrastructure projects. This IP tendering process provides an objective means of testing whether the financing costs of such projects are appropriate and reasonable. Without this tendering process, provided by the SIP regulations, competitively determining the cost of capital for a project would not be possible.

The noble Lord asked, effectively, why are the Government not making sure that Thames Water pays all the tax that it should? Thames Water Utilities Limited does pay its tax. All UK companies are allowed to claim capital allowances when they spend on capital investment programmes. That, I feel sure, was the same under the previous Government. Tax relief is allowable against the capital expenditure incurred, which reduces the tax payable, with the aim of encouraging investment by companies. Water and sewerage companies have significant capital programmes in comparison with their revenues. They therefore benefit from tax allowances proportionately more than other companies.

HM Revenue and Customs remains vigilant in ensuring that companies operating within the United Kingdom pay the tax that they are legally obliged to pay.

The noble Lord asked about executive remuneration. Thames Water is a private company and is responsible for setting its own remuneration policy which is approved by its shareholders in the normal way. Ofwat’s regulatory remit is to ensure that customers get a fair deal with good service at a fair price. Ofwat has ensured that water companies, including Thames Water, have kept price rises in line with inflation. Fair and stable returns for the water companies have enabled £108 billion of investment since privatisation to significantly improve service to customers while ensuring that bills are kept down as much as possible.

If water companies fail to provide the levels of service expected by their customers and required by their licences, Ofwat can and does take action, clawing back more than £550 million following under-performance since 2005. Thames Water has met its annual leak reduction target for the seventh year running, is delivering £1 billion of investment and continues to maintain its high drinking water quality.

In conclusion, these regulations would enable the risks and costs associated with these projects to be more transparently captured; better contain the risks and costs of financing these projects, helping to prevent those costs transferring to an undertaker’s other ongoing business and less risky infrastructure projects; help to minimise total final project costs by requiring undertakers to tender competitively an infrastructure provider to finance and deliver these projects; provide an objective means of testing whether the financing costs of a project are appropriate or reasonable; and, finally, enable any government financial assistance for such projects to be targeted at a sole project rather than at a specific undertaker with its range of services.

With those comments, I hope your Lordships will agree to have considered these regulations.

Motion agreed.

Committee adjourned at 5.22 pm.

House of Lords

Wednesday 12th June 2013 Lords Chamber

Wednesday, 12 June 2013.

15:00

Prayers—read by the Lord Bishop of Chester.

British Board of Film Classification

Wednesday 12th June 2013 Lords Chamber

Question

15:07

Asked by

[Lord Storey]

To ask Her Majesty’s Government what plans they have to re-examine the status of those films, videos and DVDs currently exempt from classification by the British Board of Film Classification.

[Lord Gardiner of Kimble]

My Lords, under the Video Recordings Act 1984, videos on recordable media, such as DVDs, are classified by the British Board of Film Classification. However, to date many products about sports, music, religion and education have been exempt from this requirement. Following a public consultation, the Government announced last month that they will bring forward legislation to tighten up the exemptions and to ensure that, in future, any products in these genres will be classified if they contain material deemed to be unsuitable for younger children.

[Lord Storey]

My Lords, I thank the Minister for his reply. I am sure that he is not aware of Cannibal Corpse’s “Live Cannibalism” DVD being legally supplied to British children or, indeed, the double-disc set “His Name was Jason: Thirty Years of Friday the 13th”, so the change in the law for such content to be brought within the regulatory scope of the BBFC cannot come too soon.

I note that the Government’s announcement also mentioned another potential loophole in the current regime, that being online music videos. Does my noble friend believe that the music industry should consider following the example of the home entertainment industry by adopting BBFC classifications for online music videos?

[Lord Gardiner of Kimble]

My Lords, I think we are agreed that the number one priority in all we are seeking to do is to protect children. The Prime Minister and the Secretary of State have been rightly robust about this, as have many noble Lords. The Government are taking action to protect children from inappropriate content, and there are strong intentions in the online area as well because it is clearly the case that children are viewing content online. We are therefore going to do more in the area of online video labelling, and we are working with many organisations and parents to deal with music or anything that could be potentially harmful to younger children.

[Baroness Howe of Idlicote]

My Lords, I congratulate the Minister on confirming that the Government have decided to act decisively to ensure that currently exempt material which is potentially harmful to children is brought within the regulatory ambit of the BBFC. I mention this because as long ago as 2009 I moved amendments in this House seeking to change the law in this area. How swiftly does the Minister think that this change to the current regime can be implemented? I know that it has the support of the BBFC and, most importantly, of the parents of vulnerable children.

[Lord Gardiner of Kimble]

My Lords, I know of the deep interest of the noble Baroness in content available online, which we need to deal with. So far as this matter is concerned, we are working carefully to ensure that the definitions dealing with violent sexual behaviour and swearing are worded so as to ensure that they identify all products that are unsuitable for younger children. The final version of the definitions will be written into the draft legislation that is to be issued for consultation soon. We want to get it right and we would very much welcome any comments. We will then need to notify the EU about the new regulations, following which there will be the secondary legislative process.

[Lord Cormack]

My Lords, does my noble friend agree that the greatest crime of the 21st century is the destruction of childhood innocence? The second greatest crime is preventing young people growing up normally and naturally. Will he be a little bit generous in his interpretation of the word “children” to make sure that we do not expose young men in puberty and girls of equivalent age to things which, frankly, they should never ever be able to see?

[Lord Gardiner of Kimble]

My Lords, I have sympathy with my noble friend. Childhood at whatever age is a very precious time of our lives and children should be able to enjoy it. It is important that the Government should work with parents because their first priority and responsibility is looking after their children. It is obvious that online content is troubling many parents, so that is why we are working to set up internet parental controls and are working with wi-fi providers on a number of issues. In that way, we can ensure that children do not see inappropriate content.

[Lord Swinfen]

My Lords, new products are being developed at an ever increasing rate. Will the Government ensure that the regulations are drafted in such a way that they can be easily and quickly updated to deal with new products coming on to the market and so safeguard our children?

[Lord Gardiner of Kimble]

My Lords, it is very much a feature of technology moving so fast that we also need to ensure that the checks and controls are appropriately calibrated so that whatever happens with technological advances children do not see inappropriate content, which is what we want to ensure.

[Lord Laming]

My Lords, does the noble Lord agree that, so far as children and young people are concerned, this material represents for them the values of our society and therefore our society has a special responsibility to make sure that what is conveyed actually accords to our values and beliefs, especially about childhood?

[Lord Gardiner of Kimble]

The noble Lord again raises an important point. That is why, across the piece, the Government, industry and charity, through the UK Council for Child Internet Safety, are working so much together and why the Secretary of State is having a summit meeting on 18 June with the major internet service providers, mobile operators, search engines and social media companies to explore all that can be done to ensure that children remain safe.

[The Earl of Glasgow]

My Lords, is the Minister aware of the scheme practised quite a lot in Italy by which DVDs and controversial material of that sort are classified by the users themselves and the users’ classification then becomes legal?

[Lord Gardiner of Kimble]

I have been quite busy learning about what happens in the United Kingdom, so I was not aware of what might be happening in Italy. However, I think—and I am sure it is what my noble friend was alluding to—we need to make sure that whether it is by age verification or whatever that children remain secure.

Ofcom: Public Service Broadcasting

Wednesday 12th June 2013 Lords Chamber

Question

15:14

Asked by

[Lord Clement-Jones]

To ask Her Majesty’s Government when they expect to reach conclusions on changes to Ofcom’s statutory duties and functions with respect to public service broadcasting.

[Lord Gardiner of Kimble]

My Lords, the Government published a consultation on 23 April proposing reforms to Ofcom’s statutory duties and functions, including measures relevant to public service broadcasting. Following this consultation, which closes on 25 June, the Government intend to bring forward a public bodies order before the Summer Recess. That order will be debated in both Houses in the autumn and we expect it to be in force at the end of this year.

[Lord Clement-Jones]

My Lords, quality and diversity in our public service broadcasting are hugely important for our society. Rapid changes in technology and convergence between the internet and television could affect both considerably over time. The Government acknowledged this in their response to the recent Communications Committee report on convergence, yet now they propose to get rid of Ofcom’s obligations to review public service broadcasters on a regular five-year basis to save just £180,000. Is that not perverse?

[Lord Gardiner of Kimble]

The intention is to provide more flexibility in the timing of when reviews of public service broadcasting are conducted. It is certainly not the intention to remove the obligation to conduct such reviews in future, but rather to ensure that when they happen they are relevant, timely and of the correct scope. Of course, I must not prejudge the consultation. There are some more weeks of it to go and comments would be most welcome.

[Lord Puttnam]

My Lords, does the Minister accept that, whereas the quality of regulation in this country over the past few years has been at times questionable, Ofcom is, in my experience, regarded internationally as the gold standard for regulation, particularly in the very complex media industry? Can he assure us that nothing will be done to diminish the quality of Ofcom or in any way reduce its powers?

[Lord Gardiner of Kimble]

I am most grateful to the noble Lord and am particularly conscious of his long-term interest in this, having been so much involved in the setting up of Ofcom. I assure him that Ofcom will be required to ensure that the quota requirements are met by the public service broadcasting sector, whether in news, current affairs, original productions, independent productions, outside-London productions or regional news. It must also publish data on compliance with the above quotas in an annual PSB report. The Government are working closely with Ofcom, which we want to continue to be a very successful organisation.

[Lord Brooke of Sutton Mandeville]

My Lords, I congratulate the Government, through my noble friend, on the fact that they launched this particular consultation on Shakespeare’s birthday.

[Lord Gardiner of Kimble]

We should all celebrate Shakespeare’s birthday. In the arts and culture debate tomorrow, I might mention something about our most famous poet. I want to emphasise that Ofcom has now been in existence for 10 years and it is appropriate, given the huge technological advances in this sector, that we should look at how we could do things better.

[Lord Foulkes of Cumnock]

Will the Minister take on special responsibility for drawing to the attention of Ofcom and all broadcasting organisations the importance of balance in their output in the run-up to the referendum on Scottish independence?

[Lord Gardiner of Kimble]

I hope the noble Lord knows my own preferences on the matter of the referendum. Of course, impartiality must be absolutely key to anything we do, whether it is a referendum or general elections. It is part of the essence of public service broadcasting.

[Baroness Bonham-Carter of Yarnbury]

My Lords, as we are talking about Ofcom’s duties, what plans do the Government have to act on the recommendations made by Ofcom about plurality in the media in a report published last year at the request of the Secretary of State?

[Lord Gardiner of Kimble]

Certain Members of your Lordships’ House attended the QSD on 22 May when we discussed plurality. The Government are seeking views on this matter, which is complex. I think Lord Justice Leveson agreed with that. We are building on Ofcom’s advice and the recommendations of Lord Justice Leveson. The process will begin in September. I know that your Lordships’ Communications Committee is also working on these matters.

[Baroness Jones of Whitchurch]

My Lords, following my question on a possible communications Bill in the Queen’s Speech debate, I was surprised to receive a letter from the noble Earl, Lord Howe, which I am sure he cleared with the noble Lord’s department. In that letter, the noble Earl states that, for the most part, our regulatory framework is working well and that there simply is not a great clamour for wholesale reform. Given the growing demands for greater child protection, which we have talked about this afternoon, and for internet controls, decent broadband and media ownership controls, does this not represent a lack of courage on the part of the Government? They really should be legislating on a broader scale to firm up outside regulation and increase controls in these areas.

[Lord Gardiner of Kimble]

I would say to the noble Baroness that the work we are doing on Ofcom is designed to ensure that we do not do things that are unnecessary and inefficient. We should be enabling Ofcom to undertake its really important responsibilities. I refer to refinements because, having looked at the recommendations in the consultation, I think they give a more refreshing and up-to-date twist on what we wanted Ofcom to do when the noble Lord, Lord Puttnam, was so involved in its creation.

[Lord Grocott]

In the light of this Question and the wider debate about the Leveson inquiry, is it not worth reminding ourselves of the fact that in this country broadcasters work within a democratically established regulatory framework? This is in comparison with the press, which talks at great length about freedom of the press. Of course we need to respect this and it is very important, but the broadcasters’ regulatory framework thoroughly enables them to conduct investigative reporting and news and current affairs reporting to the highest standards. It is perfectly possible to have the highest quality of media output within a proper regulatory framework.

[Lord Gardiner of Kimble]

I would say to the noble Lord that I think we should have a free and a responsible press.

Russia: Non-Governmental Organisations

Wednesday 12th June 2013 Lords Chamber

Question

15:22

Asked by

[Lord Judd]

To ask Her Majesty’s Government what representations they have made to the Government of Russia about their policy toward non-governmental organisations.

[Lord Wallace of Saltaire]

My Lords, the Government are concerned by pressures on NGOs across Russia, including the NGO “foreign agents” law. These concerns are outlined in the FCO’s Human Rights and Democracy report for this year. In recent months the Foreign Secretary, the Minister for Europe, and my noble friend the Minister of State for Justice have raised this subject with their Russian counterparts. Two days before the Prime Minister’s 10 May visit to Sochi, senior officials raised concerns about the treatment of civil society at the annual UK-Russia human rights dialogue, held in Moscow.

[Lord Judd]

Do the Minister and the Government agree that a vibrant civil society, participating in public debates and analysing policy on the basis of the experience of engaging in society are vital to a healthy democracy? How can the recent draconian action by the Russians, with more than 208 organisations now raided by government officials, possibly strengthen democracy and stability in Russia? How can this be reconciled with membership of the Council of Europe? What are the Government, together with European Union partners, doing, in the Ministers’ meeting at the Council of Europe, in bilateral meetings and on every possible occasion, to bring these truths home to the Russians?

[Lord Wallace of Saltaire]

My Lords, Russia is at present moving away from the principles of open society. That is deeply concerning to all of us. We continue to express our deep concerns about that, and our concern that this does not allow for the long-term stability of Russia itself, every time we meet our Russian counterparts.

[Baroness Williams of Crosby]

My Lords, while I agree strongly with some of the remarks made by my noble friend the Minister and the noble Lord, Lord Judd, at present the Council of Europe is very much engaged in close discussions with the Russian authorities and some questions are being raised about whether the draconian law will be carried out effectively or reconsidered. May I therefore suggest that the better approach at present is probably through the Council of Europe, of which Russia is a member, dedicated as it is to all the values and ideals of democracy, rather than an individual national protest by the United Kingdom when the President of Russia is just about to arrive here?

[Lord Wallace of Saltaire]

My Lords, the United Kingdom is, I think, the only EU member state that has a bilateral human rights dialogue with the Russians. We have had it for some years and we think it is valuable. The EU itself has collectively expressed its concerns at the current Russian situation. Our counterparts in the German and French Governments, whose German party political foundation offices and Alliance Française have been raided and inspected in Russia, have also expressed their concerns.

[Lord Anderson of Swansea]

My Lords, does the Minister agree that the current swathe of repression of non-governmental organisations is just one of a number of measures taken by the Russian Government as they move along the path of a quasi-tsarist autocracy? Have we specifically raised this matter in the Council of Europe with like-minded countries, as Russia is a member and has certain obligations under the Council of Europe agreement?

[Lord Wallace of Saltaire]

My Lords, we actively discuss with our partners in the European Union and the Council of Europe a whole range of concerns, including those about Russia. I think I am correct in saying that one in every four cases before the European Court of Human Rights at present concerns Russia.

[Lord Triesman]

My Lords, we share the anxieties that have been expressed. I was interested to hear the Minister mention in his very first response NGOs from outside Russia. What is the current status of the relationship between the Russian Government and the British Council, and is the British Council able to conduct its normal and completely proper work inside that country? If I may follow up a point made by the noble Baroness, Lady Williams, is there perhaps an opportunity for a side meeting at the G8 to underline this issue with the Russian President?

[Lord Wallace of Saltaire]

My Lords, the British Council was under considerable pressure some years ago. Indeed, my wife and I were in St Petersburg and visited Stephen Kinnock, who was then the head of the office there, the day after his office had been inspected by the authorities in a clear attempt to intimidate its activities. At present, however, the Alliance Française is being pursued, not the British Council. The British Council does its best to operate in rather difficult circumstances.

Museums

Wednesday 12th June 2013 Lords Chamber

Question

15:27

Asked by

[Lord Lee of Trafford]

To ask Her Majesty’s Government, in the light of the possible closure of Science Museum Group museums in the north of England, what assessment they have made of the economic, educational and cultural benefits of regional museums.

[Lord Lee of Trafford]

My Lords, I beg leave to ask the Question standing in my name on the Order Paper and in doing so declare interests as the chairman of the Association of Leading Visitor Attractions, of which the Science Museum Group is a member, and as a former chairman of MOSI, the Museum of Science & Industry in Manchester.

[Lord Gardiner of Kimble]

My Lords, our country has a diverse network of high-quality museums and galleries, both national and regional, which educate and delight local people and tourists alike. DCMS has overall responsibility for those in England. These museums have a strong identity within their local communities. They are often at the heart of their regions’ creative industries, provide an educational resource and contribute to their regions’ international reputation and economy.

[Lord Lee of Trafford]

My Lords, given that the Government are committed to promoting tourism in the regions, but also to encouraging youngsters to follow careers in science and engineering, is it not incomprehensible that the Science Museum Group is faced with a possible further 10% funding cut, on top of the 25% cut, thus publicly having to state that it might have to close one of its three regional museums? The Manchester Museum of Science & Industry, or MOSI, attracts 700,000 visitors a year of all ages. They come to see the museum of the first industrial city, the first baby computer and the first passenger railway station in Manchester. Would it not be bordering on the criminal if there was any question of contraction or closure?

[Lord Gardiner of Kimble]

My Lords, I must first acknowledge my noble friend’s long-term commitment to the Museum of Science & Industry in Manchester and as a distinguished former chairman of it. Visits to the museum have continued to increase and have increased by 31% since its merger with the Science Museum Group in January last year. I have of course read the reports in the press speculating on the future of regional branches of the Science Museum Group. The spending review process for 2015-16 has not reached its completion. It would therefore be premature, indeed impossible, for a considered decision by the Science Museum Group to be made until after that process is complete.

[Lord Faulkner of Worcester]

My Lords, I declare an interest as a trustee of the Science Museum Group and as a former chairman, like the noble Lord, Lord Lee of Trafford, of the advisory board of MOSI in Manchester. The Minister is right to draw attention to the huge popularity of MOSI. It is a similar story at the other museums in the Science Museum Group. The total number of visitors now exceeds 5 million a year. However, is he aware—and I hope that he listens very carefully to the points made by his noble friend—that the group has had to accept funding cuts of 25%, as the noble Lord says, over the past four years? A further 10%, if that is contained in the spending review, may make it inevitable, although very undesirable, that one of the museums in the group may have to close. Can he use all his influence to make sure that that spending review does not contain a cut on that scale?

[Lord Gardiner of Kimble]

My Lords, I well understand the concern that has been expressed in the north, in particular in Yorkshire and in Manchester. Clearly, as I said, the spending review process has not been completed. I am absolutely sure that ministerial colleagues to whom I have spoken in the department are absolutely clear about the contribution that museums make to the tourism market. The DCMS museums are the first six of all visitor attractions in the country. There is a full understanding of the beneficial impact that museums make on our national life.

[Lord Alton of Liverpool]

My Lords, would it not be a good idea if the Minister were to add to the number of visitors to some of the northern museums so that he could see for himself the quality of the Merseyside Maritime Museum, the Museum of Liverpool, Tate Liverpool, the Imperial War Museum North and the Museum of Science & Industry—to which the noble Lord, Lord Lee, has quite rightly drawn our attention today—and recognise that they make a major contribution to the cultural and educational life of the north of England? They are an indispensable asset for children in our schools. If they were to be removed at a time when we are trying to promote science, it would be an incredibly retrograde and backward step. It would also further entrench the impression of the north-south divide.

[Lord Gardiner of Kimble]

We do not wish for one moment for there to be any sense of divide. As the noble Lord has quite rightly said, this Government and the previous Government have invested a considerable sum of money through the Renaissance programme in regional museums. Since 2011-12, £180 million has been invested by DCMS in the regional museums. As he rightly alluded to, this programme has driven up visitor numbers in regional museums so that last year there were 19.1 million visitors to regional museums. I am very much aware of the—I think that there are seven—Liverpool museums. I have visited some and it would be lovely in the summer if I could visit many more.

[The Lord Bishop of Ripon and Leeds]

My Lords, in view of the contribution of the National Media Museum in Bradford to West Yorkshire culture, can the Minister tell us how he and colleagues will take local views into account in making decisions? In particular, what can he do to avoid competition between the three museums allegedly under threat at the moment?

[Lord Gardiner of Kimble]

As I say, there is this speculation. The three museums—the National Railway Museum in York, the National Media Museum in Bradford and MOSI in Manchester—all have a distinct character and history. I will be taking back to colleagues the strong opinions of the right reverend Prelate and others about the importance of the museums in their localities.

[Lord West of Spithead]

My Lords, I declare an interest as a trustee of the Imperial War Museum. Does the Minister agree that the draconian cuts that are being imposed have put a huge problem in the face of all the museums? Given the Imperial War Museum’s scope of museums, there is no doubt that one has to look at what draws the most visitors. There is no doubt that a museum such as the Imperial War Museum North—which is an amazing facility opposite the BBC in Salford, and is a fantastic focus—has to be at threat. I would ask whether we are looking at the dreadful business of possibly charging people, because I cannot see how museums can go forward with cuts of this scale.

[Lord Gardiner of Kimble]

My Lords, the Government are absolutely clear in the grant-in-aid arrangements that the policy of free admission should continue. Having looked at the increase in visitor numbers, and at the number of children who are visiting museums, I think that free admission is an important feature of our national and regional museum life. I am very conscious of what the noble Lord said about the Imperial War Museum. With the commemoration of the First World War and the investment that is going into the Imperial War Museum, and certainly from the meetings that I have had with officials there, I know that a lot of very exciting work is going to unfold at the Imperial War Museum as well as at Duxford. There is important work for the Imperial War Museum to show.

[Lord Shutt of Greetland]

My Lords, the clue is in the titles—the National Media Museum, the National Railway Museum, the National Coal Mining Museum for England. I have had a look at the names of two dozen people who are trustees of the Science Museum Group or members of the Science Museum advisory board and—would you believe it?—22 of those 24 people are based either in London or in Cambridge.

[Noble Lords]

Oh!

[Lord Shutt of Greetland]

Does the Minister have any faith that this group of people will have balance when it comes to looking at those national museums that are based in the regions?

[Noble Lords]

Hear, hear!

[Lord Gardiner of Kimble]

I think that I might have an uphill task persuading your Lordships. It is important to say that under the National Heritage Act 1983 the appointment of trustees must have regard to their experience of the development of science and technology, in the case of MOSI, and to their knowledge of management, industrial relations and administration. Interestingly, the chairman of the Science Museum lives in West Yorkshire, and I am led to believe that half the representatives of the board of trustees live outside London. If they are all also living in Cambridge, I will have to look at that.

Children and Families Bill

Wednesday 12th June 2013 Lords Chamber

First Reading

15:37

The Bill was brought from the Commons, read a first time and ordered to be printed.

Humber Bridge Bill

Wednesday 12th June 2013 Lords Chamber

Second Reading

15:37

Moved by

[The Chairman of Committees]

That the Bill be read a second time.

[The Chairman of Committees (Lord Sewel)]

My Lords, I beg to move that this Bill be now read a second time.

Bill read a second time.

Constitution Committee

Wednesday 12th June 2013 Lords Chamber

Membership Motion

15:38

Moved by

[The Chairman of Committees]

That Lord Lester of Herne Hill be appointed a member of the Select Committee in place of Lord Macdonald of River Glaven, resigned.

Motion agreed.

Refreshment Committee

Wednesday 12th June 2013 Lords Chamber

Membership Motion

15:38

Moved by

[The Chairman of Committees]

That Lord Tunnicliffe be appointed a member of the Select Committee in place of Baroness Gale, resigned.

Motion agreed.

Marriage (Same Sex Couples) Bill

Wednesday 12th June 2013 Lords Chamber

Order of Consideration Motion

15:39

Moved by

[Baroness Stowell of Beeston]

That it be an instruction to the Committee of the Whole House to which the Marriage (Same Sex Couples) Bill has been committed that they consider the bill in the following order:

Clauses 1 to 4, Schedule 1, Clauses 5 to 10, Schedule 2, Clause 11, Schedules 3 and 4, Clause 12, Schedule 5, Clause 13, Schedule 6, Clauses 14 and 15, Schedule 7, Clauses 16 to 19.

Motion agreed.

Health: Children's Heart Services

Wednesday 12th June 2013 Lords Chamber

Statement

15:39

[The Parliamentary Under-Secretary of State, Department of Health (Earl Howe)]

My Lords, with the leave of the House, I shall now repeat a Statement made earlier today in another place by my right honourable friend the Secretary of State for Health on the Safe and Sustainable review of children’s heart services. The Statement is as follows.

“With permission, Mr Speaker, I would like to make a Statement on the Safe and Sustainable review of children’s congenital heart services.

On average, around 3,700 heart procedures are carried out each year on children who have been diagnosed with congenital heart conditions. The mortality rates at Bristol Royal Infirmary, identified as far back as 1989, indicated that we are not as successful as we should be in such operations. The Safe and Sustainable review began in 2008 and set out to make sure that children’s heart services are the best they can be for all children across the country. Whatever the controversy about the location of such services, we all have a responsibility to ensure the best possible outcomes for children and their families, who must always come first in any decision about service provision.

Sir Ian Kennedy, in his Bristol inquiry report in 2001, recommended the concentration of medical and nursing expertise in a smaller number of centres. Subsequent working groups and reports have endorsed that recommendation, including the Royal College of Surgeons in 2007. The public consultation on the Safe and Sustainable review received over 75,000 responses. This was the largest review of its kind, conducted independently of government by the NHS.

In July 2012, the then Joint Committee of Primary Care Trusts—the JCPCT—on behalf of local NHS commissioners, decided that children’s heart surgery networks should be formally structured around specialist surgical centres in Bristol, Birmingham, Liverpool, Newcastle and Southampton, as well as Great Ormond Street and the Evelina Children’s Hospital in London. They recommended that services should no longer be provided in Leicester, Leeds, Oxford and the Royal Brompton and Harefield in London. Following the JCPCT’s announcement, three local health overview and scrutiny committees formally referred the JCPCT’s decision for me to review and I wrote to the Independent Reconfiguration Panel—the IRP—asking them to undertake a full review of the proposals.

On 30 April 2013 I received the report. I would like to thank the IRP for producing such a comprehensive review of such a challenging topic. It strongly agrees with the case for change, specifically that congenital cardiac surgery and interventional cardiology should only be provided by specialist teams large enough to sustain a comprehensive range of interventions, round-the-clock care, specialist training and research. I agree with their analysis.

However, the report also concludes that the outcome of the Safe and Sustainable review was based on a flawed analysis of the impact of incomplete proposals, and leaves too many questions about sustainability and implementation. This is clearly a serious criticism of the Safe and Sustainable process. I therefore accept their recommendation that the proposals cannot go ahead in their current form and am suspending the review today. NHS England will also seek to withdraw its appeal against the judicial review successfully achieved by Save Our Surgery in Leeds.

None the less, the IRP is clear that the clinical case for change remains, and its report is very helpful in setting out the way forward in terms of broadening the scope of the discussion, and looking in detail at the affordability and sustainability of the proposals. The IRP says—and I agree—that this is not a mandate for the status quo or for going back over all the ground already covered during the last five years. The case for change commands widespread support and understanding and we must continue to seek every opportunity to improve services for children.

The recommendations in the report set out what the IRP considers needs to be done to bring about the desired improvements in services in a way that addresses gaps and weaknesses in the original proposals. Specifically, they include: better co-ordination with the review of adult heart surgery services; expanding the detailed work on the clinical model and associated service standards for the whole pathway of care, beyond surgery; services to be fully modelled and their affordability retested; NHS England to establish a systematic, transparent, authoritative and continuous stream of data and information about the performance of congenital heart services; NHS England and the relevant professional associations to put in place the means to continuously review the pattern of activity and optimise outcomes for the more rare, innovative and complex procedures; NHS England to reflect on the criticisms of the JCPCT’s assessment of quality and learn lessons to avoid similar situations in its future commissioning of specialist services; and NHS England to use the lessons from this review to create with its partners a more resource and time-effective process for achieving genuine involvement and engagement in its commissioning of specialist services.

NHS England now must move forward on the basis of these clear recommendations and the Leeds court judgment. I have therefore today written to NHS England, and the local overview and scrutiny committees that originally referred the JCPCT’s decision to me, to explain that the IRP’s report shows that the proposals of the Safe and Sustainable review clearly cannot go ahead in their current form. It is right to give all parties some time to reflect on the best way forward, now that the IRP report is in the public domain, so I have asked NHS England to report back to me by the end of July on how it intends to proceed. In the mean time, it is important to stress that I believe that care for children with congenital heart conditions is safe in the NHS, and that ensuring it continues to be will be the top priority for all involved in this process.

I know that many families have found the Safe and Sustainable review to be a traumatic experience. People are rightly proud of the hospitals and the staff that have saved, or tried their best to save, the lives of their children. However, there is overwhelming consensus that we cannot stick with the model of care that we have now. To do so would be a betrayal of the families who lost loved ones in Bristol and who want nothing more than for the NHS to learn the lessons from their personal tragedies. So it is right we continue with this process, but it is also essential that it is performed correctly so that any decisions, as difficult as they may ultimately be, carry the confidence of the public. I commend the report and this Statement to the House”.

My Lords, that concludes the Statement.

15:47

[Lord Hunt of Kings Heath]

My Lords, I thank the noble Earl for repeating the Statement and for reminding the House of the events which led to the Safe and Sustainable review. Terrible failings in the care of very sick children at the Bristol Royal Infirmary in the 1980s and 1990s led Sir Ian Kennedy to call for expertise to be concentrated on fewer surgical sites, a call supported by more immediate, recent events, including the suspension of children’s heart surgery at the John Radcliffe Hospital in Oxford in 2010. Since Bristol, Sir Ian’s important conclusion has had the support of the health professions and all sides of the House.

As we digest what the noble Earl has said, two considerations must remain foremost in our minds. First, this issue continues to transcend party politics; and secondly, the complexity it presents should not derail us from our determination to deliver the safest possible care for children in the country. That said, changes of this magnitude must be able to command consensus and public confidence and that has not happened since the decision on site selection by the joint committee.

When it was published, while the Opposition supported the reduction in sites, we expressed concerns about the distribution of the seven sites, skewed towards the west of England and leaving a large swathe of eastern England, from Newcastle to London, without a centre. For a family living in Hull or Lincoln, the prospect of leaving home to travel hundreds of miles, with the cost of accommodation and time off work, added to their stress and anxiety. Therefore, it is not surprising that there has been such strength of feeling, particularly across Yorkshire, the Humber and east Midlands. While clinical safety must predominate, does the noble Earl agree that the NHS needs to give further consideration to public access and travel times when reconfiguring services? In this case, as the IRP points out, the joint committee considered access the least important factor. The IRP concluded, surely rightly, that the decision used a flawed and incomplete analysis of accessibility. Going forward, can the noble Earl tell me that his department will ensure that that is corrected and that access will be a significant factor in a future decision?

On the review itself, the noble Earl will know that one main concern has been that mortality data were not given enough weight. While decisions on this cannot be based on death rates alone, we agree with John Deanfield, the director of NICOR, who, in his letter to NHS England in April 2013, said:

“Mortality is only one measure of quality, but currently is the most robust available outcome”.

Will the noble Earl confirm that, in the further process of review announced today, these data will feature more prominently?

The main concern we have with the announcement that the Government have made today is the proposal to link the children’s review with the review of adult heart services and the implications that might have for the timetable. The Statement uses the words “better co-ordination”. I understand that about 30 centres are carrying out adult heart surgery. The seven selected centres for children will not be collocated with adult heart surgery. As the noble Earl knows, there are a number of specialist children’s sites. The link between the children’s sites and the adults’ sites is not at all clear. Is there a danger that, by linking the review with adult heart surgery, the Government risk a loss of focus and, indeed, more delay? By broadening it in this way, is there a danger that we will lose the consensus that has already been gained over the future of children’s heart surgery?

The decision will clearly have implications for the timetable of the children’s review. It is noticeable that the Statement does not really contain a clear timetable. Can the noble Earl set out a more precise timetable for when the actual decision is going to be made?

I wonder whether the noble Earl has seen the response from the Royal College of Surgeons today. It expressed disappointment that the reform plans will be suspended, adding to what it describes as a long and exhaustive process. In its final comment, it urges NHS England to act swiftly and decisively, and says:

“Continued foot dragging will only delay the much needed reform that will ensure children will get the best treatment available”.

Can the noble Earl respond to that? He says that the review will be concluded by the autumn, but the question here is when decisions will be made and, even more importantly, when they will be implemented.

The Statement sets out a major role for NHS England going forward. Can I be assured that, in the process that NHS England takes forward, it will operate independently of interests linked to the selected sites? Does he agree that it is vital that we do not lose confidence in the process and damage confidence in all 10 existing services? I noted what he said in reassuring the House about safety. I welcome that, but is his department taking action to ensure that all existing units will not lose expertise in the intervening period? That will be a source of concern the longer the review takes and the longer the decision takes to make.

It is clearly important that public confidence in the process and the final decision is maintained but, balanced against that, unnecessary delay will not bring the best results for the children who most need our help. In that regard, I should like to ask him about the comments made by Sir David Nicholson, the chief executive of the NHS, at the annual meeting of the NHS Confederation last week. In an interesting speech, he said:

“We cannot let the tyranny of the electoral cycle stop us from making the real and fundamental changes that we need to make to the NHS”.

He went on to say:

“So what happened when we got a new government in is we wasted those two years where you can really make change happen. We spent our time talking about reorganisation and changes and all the rest of it and we didn’t talk about the really important changes that are required for the NHS”.

I am quoting that because the election is less than two years away. Can the noble Earl reassure me that the electoral cycle is not going to get in the way of coming to a sensible and speedy decision?

15:55

[Earl Howe]

My Lords, I am grateful to the noble Lord, Lord Hunt, for his measured comments. I agree with many, if not most, of them. I certainly agree that party politics should play no part in this matter. That is one reason why in 2008 his Government decided that the Safe and Sustainable review should be a process set apart from the Department of Health and led by the NHS. We agree with that and still believe that it should be NHS-led. I also agree with what he said about the complexity of this issue being no excuse for not proceeding as fast as is safe and possible with a process designed to see a satisfactory resolution of this issue. That is certainly our view.

I also welcome what the noble Lord said about public confidence. It is clear that parts of the Safe and Sustainable process sadly did not command public confidence, not least in Leeds, but also in Leicester and other places. The noble Lord will no doubt have noticed, in the IRP’s press releases today, the emphasis on openness and transparency in the process going forward. NHS England has also made clear that whatever the process that it recommends going forward, it should involve the maximum amount of consultation with those concerned, not just the clinicians in the centres involved, who are of course very important, but also patients and their families.

The noble Lord referred to the need for greater consideration to be given to access and travel times. I noted an emphasis on that very point in recommendation 4 of the IRP’s report. They clearly matter to families, as was very much picked up by the IRP in its work engaging with stakeholders. In agreeing to address all the recommendations of the IRP report, which NHS England has done, it could not fail to address that part of the recommendation.

With regard to mortality data, I am sure that the noble Lord will understand that when we are dealing with a procedure as complicated and specialist as children’s congenital heart surgery, while transparency of data is certainly an objective, it is important that the data published are not open to misinterpretation. Mortality data are a problem that beset this kind of area because the numbers are small. They must also be presented in a way that is understandable to the public as well as to clinicians. For the most part, clinicians already have this data, but it is important going forward to ensure that when we publish data, there is genuine comparability between the various centres in terms of the outcomes denoted.

The noble Lord rightly said that, by introducing the dimension of adult cardiac surgery, the IRP had added greater complexity to the whole issue. There is no doubt that that is true. All I will say to him is that this was by far the longest and most complicated review that the IRP has undertaken in its 10-year history. It took evidence over 25 full days. That alone should indicate that the opinions that were tapped were very extensive. The IRP did not come up with this recommendation lightly. Although it adds complexity, it behoves NHS England to take that point extremely seriously.

As regards the timetable for the work going forward, my right honourable friend the Secretary of State has asked NHS England to provide him with an interim report by the end of July. NHS England’s press release states:

“We will take the time to listen before coming up with a new proposition, working with patients, clinicians and the providers of services. We intend to announce a new way forward in the autumn, with plans for implementation within 12 months”.

I believe that is an ambitious aim given the added complexity, but it indicates that NHS England is conscious of the need to make progress in this area as rapidly as possible. As soon as I have further information—no doubt at the end of July or shortly after—I will ensure that the House is made aware of it.

I have seen the Royal College of Surgeons’ press release. It is impossible to disagree with it that this is a disappointing state of affairs. Everyone would like to see this issue resolved. Nevertheless, the points the college makes, which were reflected in the noble Lord’s points about the need for expedition in this area, are absolutely right. The noble Lord was also right to say that over the coming months we need to make sure that all the units, which do such a fantastic job in this very complex area of clinical delivery, are supported and feel that their work is appreciated. It is certainly important that we do not see a draining away of expertise. The clinicians in the various centres should now see this as an opportunity to present their case even more fully than they did before. I hope that they will welcome that opportunity.

As regards the tyranny of the electoral cycle, I hope that in my opening remarks I expressed my agreement that that should not play a part in this. In so far as we can divorce decisions of this clinical magnitude from politics, the better it will be. We should achieve that if this process is as consultative and open as possible, as everybody wishes it to be.

16:03

[Lord Warner]

My Lords, I take us back to Sir Ian Kennedy’s review 12 years ago in which he made it crystal clear that unless we significantly reduced the number of these centres, children would continue to die unnecessarily. That was the brutal conclusion of the Bristol inquiry. Has anything come out of the IRP review that fundamentally changes the July 2012 decision of the Joint Committee of Primary Care Trusts that seven centres, with clinical networks built around them, was the right number? As I understand it, the argument is not necessarily that seven was the wrong number of centres, but that the wrong seven were chosen. Are we not now opening up the whole issue of the relationship with adult services, which will take us back to a situation where we start to review from the beginning the appropriateness of the particular centres? Do we not need to get back to where the JCPCT was when there was a good deal of consensus around the idea that seven was the right kind of number? The issue is really about east coast versus west coast, and the danger of this report, thorough though it may be, is that it will now reopen all the issues on which we had actually made a good deal of progress by 2012.

[Earl Howe]

That is indeed the core of the disappointment felt by the clinical community and noble Lords: that we are little further forward in terms of deciding exactly where these services should be delivered. The noble Lord is also right to say that support for a philosophy of improving children’s heart services by concentrating surgical expertise to provide round-the-clock cover and develop networks of care is as strong as ever. There is a rare consensus on the clinical case for improving services on the pathway of care for children. The IRP has said that its report is not a mandate for going back over the ground of the past five years; indeed, it commends a great deal of the work done by the JCPCT. The IRP says that that work should be built upon. The JCPCT should not necessarily feel bruised by this, although I am sure that it will feel thoroughly disappointed. However, its groundwork has been publicly appreciated, and it is now for NHS England to take that work forward as swiftly as it can.

[Baroness Howarth of Breckland]

My Lords, I speak as the patron of Little Hearts Matter, the organisation that represents a large number of families who have children with heart conditions, particularly hypoplastic left heart syndrome, which is extremely serious and needs highly skilled intervention. Who does the Minister think is most disappointed about the failure of the review? I probably meet more families and children than most of your Lordships—children who await open heart surgery or extremely complex technical interventions, and whose anxiety is huge; and parents who thought that they were going to have clear answers on where their children would receive treatment and on the quality of those interventions at the end of the safe and sustainable review. I ask the Minister to take back with him all those disappointments and to look not only at safety, which is key to the families. Many of them would travel to wherever you took them if they were sure that the operation would be successful. As a woman from Yorkshire and the east of England, I understand that gap, but what the families want most is quality of service.

As the noble Lord, Lord Warner, pointed out, there is also great disappointment about the link being made with adult services because of where those services are located. Despite the review, there is a lack of understanding of the needs of children. There are certainly transitional difficulties and I ask the Minister whether it is those issues or other issues that have led to children being considered alongside adults. Will he take away with him the disappointment felt by families who are waiting longer for interventions because this has caused delay?

[Earl Howe]

My Lords, I am accountable to this House for government policy, but it is important for the noble Baroness to understand that this has been an NHS-led review. Many of her questions are for NHS England now to address. Of course there will be huge disappointment and concern among the families of those who require surgery in this area. I want to emphasise that until a decision is reached, the centres now delivering children’s heart services will continue to do so and will be fully supported in doing so.

However, we cannot ignore a series of recommendations from the IRP that has roundly criticised the methodology of the JCPCT. It concluded that the JCPCT’s way forward was flawed because the analysis was insufficiently thorough. If our aim is to improve the quality of outcomes for these children, I do not believe that it is in anyone’s interests to try to say to ourselves that we can make do with a half-good set of solutions. I do not suggest that the noble Baroness is saying that; of course she is not. We need to be thorough about this without spending another 10 years over it. I hope that I have given the sense to the House that NHS England is determined to progress this rapidly but thoroughly and, above all, in a consultative way. The families will have a chance to have their say in that process.

[Lord Walton of Detchant]

My Lords—

[Baroness Northover]

My Lords, I remind noble Lords that these should be brief interventions. We have only had two thus far and we are seven minutes in. I suggest we hear the Bishop, then from these Benches and we try to get around.

[The Lord Bishop of Ripon and Leeds]

My Lords, I am grateful to the Minister and I am also grateful to the Leeds group Save our Surgery for persisting with criticisms, at least some of which seem to have been justified, as they pursued this. I am particularly grateful for the affirmation that children and their families must always come first. Will the Minister also accept that nothing about us should be done without us? Therefore, will he ensure that families, local communities and, indeed, the case for keeping cardiac and other children’s services in our hospitals are heard, in addition to the clinical professionals?

[Earl Howe]

I can readily agree with the right reverend Prelate. I think it is illustrative of the IRP’s approach that in its press release it states:

“The critical factor to consider, in the Panel’s view, is that engagement of all interested parties is the key to achieving improvements for patients and families without unnecessary delay. There is now a real opportunity to involve patients, the public and other stakeholders in taking work forward as set out in the Panel’s recommendations”.

I endorse that view wholeheartedly, and it is a point that has been directly picked up by NHS England in its press release today.

[Baroness Eaton]

My Lords, will my noble friend give an assurance that when calculating where centres should be located, account is taken not just of population numbers, but of the make-up of that population? He will know, for example, that children of Asian descent have greater need for these services than other communities, making up 23% of cases at Leeds. Their faster growing population must be taken into account.

[Earl Howe]

I hope that my noble friend will be reassured by the IRP’s recognition that the location and geography of these centres and where they are in the country are material factors in this equation. At the same time, I think it would be wrong to give the impression that one can establish a centre of expertise of this kind in every city; that is clearly not realistic. Merely because there is a certain density of a population in a location does not mean to say that there can be a children’s heart centre very close to the centre of that population. This is a highly specialised service and we must recognise that the centres that will deliver it will be few in number. Nevertheless, I am sure that the message that my noble friend has given will not be lost on NHS England.

[Baroness Jolly]

My Lords, it is critical that however NHS England proceeds, it does it openly and transparently. I welcome the Minister’s comments on that. Will he also agree that meetings of any review body should be advertised, public and make all necessary papers available to the public?

[Earl Howe]

I agree that transparency in the process is vital, and I have no doubt that NHS England, in saying what it has today about its general approach to this, will bear that very point in mind.

[Lord Woolmer of Leeds]

My Lords, does the noble Earl recognise that in Leeds there will be a great sense of justification regarding the criticisms of the process previously followed and a welcoming of the forensic critique by the latest panel of that process? While it is certainly important that collocation of services is not essential to the provision of children’s heart surgery, does the Minister agree that, where there is outstanding and deliberately engineered collocation of high quality, that is an important factor in the future location of children’s heart surgery?

[Earl Howe]

The noble Lord makes another very good point, and Recommendation 3 of the IRP report focuses on that very issue. It says:

“Before further considering options for change, the detailed work on the clinical model and associated service standards for the whole pathway of care must be completed to demonstrate the benefits for patients and how services will be delivered across each network”.

Therefore, that point has been explicitly recognised.

[Lord Walton of Detchant]

My Lords, the noble Earl has explained with his customary clarity the reasons for this further delay. However, surely he would agree that, in the ultimate, the decision that is eventually reached must be based on quality of service and quality of outcomes. This must surely be the guiding principle throughout. I fully appreciate the concerns expressed by the people surrounding the units that were originally marked for closure, but I have to express a personal avuncular interest in Freeman Hospital in Newcastle, which, according to all international comparisons, is producing results in paediatric and adult heart surgery that stand comparison with the best cardiac centres in the world. I know that this further delay is going to cause concern and further damage morale in that unit. I only hope that in the long term it does not have any effect on the efficiency of the service. Let us hope that this review is concluded as quickly as possible.

[Earl Howe]

My Lords, I pay tribute to the work done in Newcastle in this extremely complex area of surgery. The noble Lord knows that hospital better than anyone in this House, and I understand the disappointment felt in Newcastle about this decision. Nevertheless, I would slightly qualify the comment that he made at the beginning. Although I agree that the decision must depend on outcomes and the quality of care, it must also bear in mind the sustainability of the service into the future. While we can recognise good care when we see it now, we must be sure that the service is capable of being sustained on that level into the future.

[Baroness Finlay of Llandaff]

Is the Minister able to tell us how many vacancies currently exist among highly specialised staff in children’s heart units and what NHS England is doing to monitor vacancies? During a time of uncertainty, when staff do not know what their future will be, recruitment problems can arise, and where vacancies occur at a very senior, highly specialised level, that in itself can threaten the quality of the service and indeed jeopardise long-term sustainability.

[Earl Howe]

I do not in fact have any statistics on vacancies, although if I can acquire them I shall certainly pass them on to the noble Baroness. However, the central point that she makes is of course right, and the second recommendation made by the IRP relates to the need to have sufficient staff in place to deliver a safe service. It says that patients should receive this service,

“from teams with at least four full-time consultant congenital heart surgeons and appropriate numbers of other specialist staff to sustain a comprehensive range of interventions, round the clock care”,

and, interestingly,

“training and research”.

I think that that sends a signal that will resonate with many noble Lords in the context of debates that we have had in the past about centres of excellence in the NHS.

Care Bill [HL]

Wednesday 12th June 2013 Lords Chamber

Committee (3rd Day)

Relevant document: 1st Report from the Delegated Powers Committee.

16:19

Clause 97 : The HRA’s functions

Amendment 58A

Moved by

[Lord Collins of Highbury]

58A: Clause 97, page 80, line 35, at end insert—
“( ) The HRA shall also have the function of encouraging the translation of research into innovative practice.”

[Lord Collins of Highbury]

My Lords, in Amendment 58A, in addition to conducting and promoting health and social care research, we are seeking to give the Health Research Authority the ability to encourage this research to be translated into innovative practice.

On Monday, in a debate on amendments to Health Education England, many noble Lords highlighted the need to place research at the centre of what the NHS does. Under the Health and Social Care Act, Labour fully supported placing duties on the Secretary of State, the National Commissioning Board and CCGs to promote research. Indeed, my noble friends Lady Thornton and Lord Hunt supported amendments to the Bill reinforcing the importance of research.

In Monday’s debate, my noble friend Lady Wheeler reminded us of the concerns and frustration at the often painfully slow, complex and bureaucratic process of getting innovation in care and treatment adopted in the NHS. I suspect that the noble Earl shares this concern as in the debate in this House last January he reminded us that it took an estimated 17 years for only 14% of new scientific discoveries to enter day-to-day clinical practice. On Monday, too, my noble friend Lord Turnberg referred to the vision for research in the NHS contained in the recent publication of the Association of Medical Research Charities. In this vision, every patient should be offered the opportunity to be involved in research; all staff should be made aware of the importance of research; and the NHS should conduct high quality research and adopt innovation in healthcare rapidly. The purpose of the amendment is to achieve a joined-up approach in reaching these objectives so that when research is commissioned these principles are absolutely borne in mind. I look forward to hearing the Minister’s response.

With regard to Clause 97 standing part of the Bill, I should like to refer the noble Earl to paragraph 8 of the first report this Session of the Delegated Powers and Regulatory Reform Committee. The committee expressed concern over the Secretary of State’s powers to amend the main functions of the Health Research Authority. If, as suggested, they were needed to meet the obligations of an EU directive, an appropriate amendment could be made by exercising powers under Section 2(2) of the European Communities Act 1972. If that is the case, perhaps the noble Earl could explain why the Secretary of State needs these extra powers.

It is a long time since I completed my British Government A-level. I recall how Henry VIII clauses can give powers to delegated legislation to amend or repeal Acts of Parliament. However, I did a little more recent research and found reference to the 1932 Committee on Ministers’ Powers. One quote from its report is particularly relevant. A member said that, whether good or bad, delegated legislation is inevitable. It is,

“a necessary evil, inevitable … But nevertheless a tendency to be watched with misgiving”.

I look forward to the noble Earl’s further explanation as to why the Department of Health believes that these powers are necessary.

[Lord Walton of Detchant]

My Lords, I rise briefly to express my strong support for Amendment 58A. I used to teach my medical students and my postgraduates by telling them that today’s discoveries in basic medical science bring about tomorrow’s practical developments in patient care. Surely this is what the amendment is about. If I were to be pedantic, I would prefer a change in the wording to:

“The HRA shall also have the function of,”

promoting

“the translation of research into innovative practice”.

That is preferable to simply “encouraging” it. Again, I am happy to support the amendment.

[The Parliamentary Under-Secretary of State, Department of Health (Earl Howe)]

My Lords, this amendment takes us to a subject that is dear to my heart—the translation of research—and I agree very much with the tenor of what the noble Lord, Lord Collins, had to say. The Committee will know that our vision is to improve the health and wealth of the nation through research. The Government are committed to cutting the bureaucracy involved in health and social care research. We want to speed up the initiation and delivery of research so that research findings can benefit people more quickly and improve the UK’s competitiveness in the life sciences. At the same time, research involves a degree of risk, and we need to balance a desire for expediency with appropriate safeguards to protect people who participate or who may participate in research.

Clause 97 sets out the Health Research Authority’s four main functions, which are described in more detail in Clauses 98 to 104. It also sets out the authority’s main objective in performing those functions. The Health Research Authority will have functions in four main areas. These will be, first, functions relating to the co-ordination and standardisation of practice relating to the regulation of health and social care research; secondly, functions relating to research ethics committees; thirdly, functions as a member of the UK Ethics Committee Authority; and, lastly, functions relating to approvals for the exceptional processing of confidential patient information. The Health Research Authority’s main objective in carrying out its functions will be to protect participants, potential participants and the general public by encouraging safe and ethical research, and to promote their interests by facilitating the conduct of such research. This objective has been deliberately framed in a way that ensures that the interests of participants and the public are put first.

As I have said, research sometimes involves a degree of risk, so regulation provides participants, potential participants and the public with assurance that there are appropriate safeguards in which they can be confident. The Health Research Authority will meet the first part of its objective through the regulatory functions that this Bill confers on it relating to the regulation of health research and social care research in order to protect the dignity, rights, safety and well-being of research participants. The second part of the Health Research Authority’s overarching objective is to promote the interests of participants, potential participants and the general public in health research and social care research. The Health Research Authority will promote these interests by facilitating high quality and ethical research. This includes co-operating with others to create a unified approval process for research and to promote consistent and proportionate standards for compliance and inspection. To meet its objective of protecting and promoting participants, potential participants and public interest in research, we would expect the HRA to engage patients and the public in its work. For example, Schedule 7 would give it the power to set up committees or sub-committees which may include people from outside the Health Research Authority.

I turn now to the specifics of Amendment 58A, which seeks to make encouraging the translation of research into innovative practice a function of the Health Research Authority. First, I should like to reassure the noble Lord, Lord Collins, and the Committee that we are fully committed to encouraging the translation of research into practice. The Health and Social Care Act 2012 recognises the need to promote research and the use of research evidence and has created unprecedented powers and duties at all levels to meet that need. When it was passing through your Lordships’ House, we debated the duties that the Act places on the Secretary of State. Noble Lords will remember that the Act places a duty on the Secretary of State to promote the use within the health service of evidence obtained from research when exercising his functions in relation to the health service. The 2012 Act also places equivalent duties on the NHS Commissioning Board, now known as NHS England, and clinical commissioning groups when they are exercising their functions under the 2012 Act.

16:30

The National Institute for Health and Care Excellence has a key role here. Its guidance helps health and care professionals to deliver the best possible care based on the best available evidence. In addition, it hosts NICE Evidence Services, a web-based portal that provides fast access to authoritative health and social care evidence. It has more than 250,000 resources from many accredited sources including the Cochrane Library and the royal colleges.

It is important to look at the wider picture here. The National Institute for Health Research also plays a vital role in driving faster translation of basic science discoveries into tangible benefits for patients and the economy and developing and supporting the people who conduct and contribute to applied health research. The NIHR provides the support and facilities the NHS needs for first-class research by funding a range of infrastructure facilities. This includes providing £800 million over five years to fund 11 biomedical research centres and 20 biomedical research units that conduct and support translational research to transform scientific breakthroughs into life-saving treatments.

NHS England recently designated 15 new academic health science networks. Their core purpose is to transform the identification, adoption and spread of proven innovations and best practice throughout the NHS. These have the potential to transform health and healthcare by putting innovation at the heart of the NHS. This will improve patient outcomes as well as contribute to economic growth.

As I have said, we need to look at what is going on in the round rather than just focusing on the HRA. As the HRA’s role is primarily about facilitating the initiation of safe and ethical research, it is not our intention to give it a function of encouraging the translation of research into innovative practice.

I hope I have been able to reassure the noble Lord that, while I am in sympathy with the spirit of Amendment 58A, I do not think that this is an appropriate function to put in the Bill for the HRA. We can feel relaxed about not doing that because there are other mechanisms in place to encourage the translation of research into innovative practice.

The noble Lord asked me about the power to amend the list of the Health Research Authority’s main functions in Clause 97(1). This power will ensure that the list of the Health Research Authority’s main functions is kept up to date in the light of any changes to legislation. However, we have not yet responded to your Lordships’ Delegated Powers and Regulatory Reform Committee. We will be doing so shortly.

Secondary legislation is regarded by some as a necessary evil. It is an expedient deployed by all Governments. We are sensitive to the caution that surrounds it in this House and the other place. However, it does not give the Secretary of State any additional power to add functions, but only to make consequential changes to the list when functions are conferred on the Health Research Authority in ways other than by primary legislation; for example, by way of regulations. That is because such regulations would not themselves be able to effect a change to the list in this clause. The scope for using this power is fairly limited. I hope that explanation is helpful and that the noble Lord will feel able to withdraw his amendment.

[Lord Collins of Highbury]

I thank the Minister for that response. I agree with him that we have to see this in the round. We were trying to pick this up as an objective rather than as a specific function so that in its work the HRA could see the benefits of ensuring that research was implemented in a way so as to change practice. In relation to Clause 97 standing part of the Bill, I again hear what the Minister has said. I was rather hoping for a detailed reference to Henry VIII in his response but that was not forthcoming. We will need to watch this matter carefully. I look forward to seeing the Government’s response to the committee’s report. In the light of that, I beg leave to withdraw the amendment.

Amendment 58A withdrawn.

Clause 97 agreed.

Clause 98 : Co-ordinating and promoting regulatory practice etc.

Amendment 58B

Moved by

[Lord Hunt of Kings Heath]

58B: Clause 98, page 81, line 25, at end insert—
“( ) the Medical Royal Colleges;”

[Lord Hunt of Kings Heath]

My Lords, Clause 98 concerns a duty of co-operation with the Health Research Authority. That is of course absolutely supported. My Amendments 58B and 58C would insert into the list of organisations,

“Medical Royal Colleges … the General Medical Council, the General Dental Council and the Nursing and Midwifery Council”.

I have no doubt that the noble Earl will warn me of the dangers of this, but in a sense his own department has provoked it by putting a list into the Bill. Inevitably, we looked at that and wondered why some organisations were missing. I realise that Clause 98(1)(i) allows flexibility by regulations to add to the list and I am sure that that flexibility is welcome, but we should get this right in the first place. I find it difficult to understand why, for instance, the medical royal colleges are not listed. They have a vital role to play in this area.

Similarly, I support the noble Baroness, Lady Emerton, in her Amendment 59. I am sure she will speak to that in a moment. If the Chief Medical Officer is named, why is the Chief Nursing Officer not? I know there has been concern over the years about the position of the Chief Nursing Officer. The last Government as well as this one have debated this issue. Given that we wish to see an extension of research into nursing and clinical areas because of the absolute importance of enhancing the quality of nursing, it is disappointing that the Chief Nursing Officer is not listed.

I also support Amendment 61 from the noble Lord, Lord Willis, which takes the responsibility in Clause 98(7) of local authorities and NHS trusts to have regard to guidance from the HRA on good practice in research and extends it to other providers, including the private sector. These are important amendments as a whole. It is important that the Bill is informed and improved.

On my Amendment 61A, I am puzzled that in Clause 98(7) the requirement is only to have regard to HRA guidance. Surely that should be strengthened, as in my amendment, which says that guidance “must” be followed,

“unless there is good reason not to do so”.

I have taken advice on this matter. The noble Earl will know that there has been a problem over the years in getting approval for multicentre trial research. I understand that the research ethics committees have improved their performance in recent years, and that is to be welcomed, but we now apparently have the problem with some NHS trusts and foundation trusts. Of course, as this is the start of another Committee day, I ought to declare my interests as the chair of a foundation trust and as a consultant and trainer with Cumberlege Connections. It is disappointing if individual NHS organisations are holding up multicentre research, for all the reasons that we know about: UK plc and the need for us to ensure that there is greater investment in research in the UK. I want some assurance that if there is undue delay, the HRA will be able to intervene and ensure that NHS organisations get on with giving the necessary approval.

On Amendment 60A, health research capacity in the UK is of course one of our strongest assets. It includes pharmaceuticals and medical devices, and takes place in our medical schools and hospitals. World-class research is undertaken here, frequently with outstanding results, yet we consistently fail to exploit that research when it comes to its translation into practice. How many other countries have exploited research undertaken in this country? I very much welcome the establishment of academic health science networks, which are responsible for encouraging much closer links between research and health service practice.

However, there is much more to be done. I would like the HRA’s objectives to include encouraging innovation and practice. It is important that the HRA is in a position to advise the department on potential policies that might have an impact on the scale of research and development in the UK. One such example is the present intention to move away from the current pharmaceutical price regulation scheme method of reimbursing pharmaceuticals. I know that the Government are committed to the introduction of value-based pricing. I always try to tempt the noble Earl to debate in your Lordships’ House the introduction of value-based pricing, principally because very few people understand what it involves. Even having been the Minister who received the original report on it, I must say that I am still in the dark as to exactly how it will unfold.

My key question is this. I know that the PPRS approach is not perfect and that at regular intervals Governments negotiate it downwards, but it has always given flexibility to the industry to price new-licence medicines as it wishes within a profit cap. The advantage of that flexibility is that many new drugs are launched in the UK rather than in other countries. I would like to hear from the noble Earl that the introduction of value-based pricing will not have an impact on the willingness and ability of pharmaceutical companies to continue launching products in the UK. I believe there is a link between the launch of products and investment in R&D in this country.

I may strain the patience of the House, but while I am talking about pharmaceuticals it is tempting to ask the noble Earl about the implications for the cancer drug fund. He knows that the intention was for that fund to become obsolete with the introduction of value-based pricing. However, cancer charities that I have met believe that value-based pricing will apply primarily to new active substance licences from 2014, and will therefore have limited impact on treatments made available through the fund. Will the noble Earl comment, or perhaps write to me, with an assurance that, before firm proposals are made on this issue, full consideration will be given to the impact of value-based pricing on the cancer drug fund, its continuation or potential substitution? I beg to move.

16:45

[Lord Turnberg]

My Lords, I strongly support my noble friend in Amendments 58B, 58C and 59. This clause is about taking note of the regulation and the regulation of research activities, but not of people who are engaged in research. It is important to involve those who regulate the professions—the General Medical Council, the General Dental Council, the Nursing and Midwifery Council—as well as the nurses. I agree entirely with the statement that the nurses should be included. In saying this I should also mention the pharmacists, who play an important part in research. I have been approached by those involved in pharmacy regulation to indicate that they also have an interest here.

I wish to speak particularly to Amendment 60, which is in my name, and to Amendments 61 and 62. On Amendment 60, I emphasise the important part played by the local R&D committees of NHS trusts, which the noble Lord, Lord Hunt, mentioned. We now have the Health Research Authority, which is doing a really remarkable job in speeding up the process for approval of research by bringing together the different research ethics committees and the special ethical approval for research, using data where patients are no longer able to give consent. It has developed a single portal of entry and a single application, which is having an enormously helpful effect, but there remains one major hurdle in the way of those trying to carry out multicentre clinical trials: the local R&D committees of NHS trusts. Some are good and speedy while others are slow and capricious, and the whole clinical trial is determined by the slowest and most capricious of those who have to give approval.

When the Academy of Medical Sciences reviewed research regulation, it identified the local R&D committees as the most difficult and time-consuming concerned, with delays of almost a year in too many instances, so in Amendment 60 we are trying to give the HRA the responsibility of rationalising and improving the approval processes in R&D committees. If it can get the approval of all trust R&D committees to rely on and accept a single robust assessment, covering all their various concerns, it will not only relieve them of that burden but give them the confidence that the review has been properly performed. It will also speed up the process for researchers. I hope that we can include this message in the Bill at a time when I know that the HRA itself is working hard to achieve it. The amendment is simply intended to offer it the support that it needs for its efforts.

Amendment 61, in the name of the noble Lord, Lord Willis, who unfortunately still cannot be with us, gets at the problem of ensuring that all providers of services for the NHS, including the private sector, should have the same responsibilities for research and innovation as the rest of the NHS. The HRA should have a role in ensuring that they do. It is important that their staff have opportunities to engage in research; certainly, they should be encouraged to introduce innovation into their practice.

Amendment 62 is also in the name of the noble Lord, Lord Willis. We welcome the explicit mention of the responsibilities of NHS trusts in the Bill. However, there is further need to ensure that trusts not only have regard to guidance issued by the HRA but actively comply with such guidance. I would welcome further clarification of how the requirement to have regard to such guidance will be ensured and how trusts’ compliance with such guidance might be strengthened.

[Lord Walton of Detchant]

My Lords, I was uncertain whether to speak on these amendments in the presence of two past presidents of medical royal colleges, the noble Lords, Lord Turnberg and Lord Patel. I feel unable to support Amendment 58B because the medical royal colleges are not regulatory bodies. They are essentially educational bodies. They play a role in producing and monitoring the standards of qualifying examinations for those seeking to be specialists, but they are essentially educational and do not have a regulatory role, although, of course, they play an important part in advising on a whole range of health service issues.

However, I believe it is right that Amendment 58C should be inserted, because the bodies mentioned are regulatory authorities. The General Medical Council, for instance, can play a crucial and important role in disciplining doctors who have been found guilty of fraud and misconduct in medical research. This is very relevant to the qualities and responsibilities of the HRA, and for that reason I believe it right for this amendment to be included in the Bill.

[Baroness Emerton]

I rise to speak to Amendment 59 which includes the Chief Nursing Officer in the list of those participating in the authority. I thank the noble Lord, Lord Hunt, for his words on this point. I have raised the issue of the importance of evidence-based practice and the need for us to be able to develop research within the nursing profession where, to date, it has not been at the forefront of progress. Having the Chief Nursing Officer taking part in the work of the research authority, although perhaps not in its detailed content, will assist in raising the profile of the importance of research. It may well be delegated from the CCGs to the health trusts, where we may see professors of research, which will then encourage research throughout. The nursing profession is the largest single workforce within the NHS. It is important that we promote the idea and development of research by having the Chief Nursing Officer in the list.

While on this subject, it is encouraging to see the list in the Bill. When the Health Bill was introduced, health education was not included and the membership of Health Education England was not clearly set out. Although it does not relate to research, I would like to mention the importance of having an executive nurse on the health education board, because there is an executive doctor, but not an executive nurse. Perhaps I can return to this when we come to Report.

[Lord MacKenzie of Culkein]

My Lords, I rise briefly to speak to Amendments 58C and 59. The noble Lord, Lord Hunt, and the noble Baroness, Lady Emerton, rightly referred to including nursing in the Bill.

As the noble Baroness, Lady Emerton, said, the practice of nursing these days is underpinned by research. Of necessity, nurses are involved in research, and it must be right to include the Nursing and Midwifery Council and the Chief Nursing Officer in the Bill.

In debates on the Bill, we have heard a number of times that it is all too easy to exclude nurses. Whatever body they should be represented on, they so often are not there. I can go back, probably the better part of 40 years, maybe more, to when I once had the temerity to ask my matron to raise something at the hospital management committee. She said to me, “I’m sorry, nurse, I can’t, because I only attend by invitation of the group secretary”.

There have probably been about 20 reorganisations—I forget how many—since those days. However, all too often the situation has not changed and nurses remain excluded. The reason for excluding them, very often, is that the legislation does not cover it and therefore it is not necessary for nurses to be included. We now have the opportunity. Let us have nursing in the Bill. If we are going to have lists, as the noble Lord, Lord Hunt, said, I want to see nurses in it. I hope that the Committee will support that.

[Baroness Cumberlege]

My Lords, I strongly support the amendment tabled by the noble Baroness, Lady Emerton, and am very interested in what the noble Lord, Lord MacKenzie, said. It seems that, over the years, nursing has been the poor relation when it comes to promoting the medical profession. Both are so important, and they have to work together. If the Francis report tells us anything, it is that we need to ensure that both are of a very high quality.

I asked the Royal College of Nursing today to give me some examples of research that nurses are doing. I will not try the patience of the Committee by going through them, but it gave me three extremely good examples which undoubtedly improve the quality of patients’ experiences and recovery rates. This work is going on, but it really should be of a higher profile. It should be applauded and used. I appreciate very much what the noble Lord, Lord Hunt, said about lists, which are a trap that I remember falling into on occasions when I was a Minister. I suspect that the noble Earl will tell us that we want to have it both ways: sometimes we want things in regulations because that is more flexible and at other times we want them in the Bill. This is something of a dilemma, but if the medical profession is in the Bill, nursing certainly should be as well.

I also strongly support Amendment 60, in the name of the noble Lord, Lord Turnberg. I was very interested to read about the delays that occur through not getting together all the different organisations that are going to be involved in a single trial. According to Kidney Research UK, the time taken in one trail to receive R&D permission varied from around five weeks to 29 weeks. A study of stroke survivors took between one week and 35 weeks to receive permission from the NHS trusts involved. The time taken between submission of site-specific information and NHS approval ranged from five weeks to 50 weeks for a multi-centre trial comparing two types of emergency intervention for ruptured aortic aneurysm. This is totally unacceptable. Those who are promoting the research, and are the leaders in it, must get so frustrated when the bureaucracy will not allow them to go ahead. We need good research. It makes a huge improvement to patients’ lives, especially, of course, when it is translated to the patient in the bed, as it were. Anything that we can do to speed this up and to put pressure on to ensure that the time lags are not as long as this would be very much welcomed.

[Lord Patel]

My Lords, I rise to support Amendments 59, 60, 61 and 62, to which I have put my name. It was very clever of the noble Lord, Lord Hunt of Kings Heath, to have an amendment about the medical royal colleges lead to a discussion on value-based pricing and the cancer drugs fund. I am tempted to have that debate because it may be much more interesting; it is an issue that we should debate at some stage. In responding to the previous amendment, the noble Earl highlighted the Government’s strong backing for life sciences. When we talk about value-based pricing, we must consider how we could reimburse cell-based therapy, which is not drug therapy, at what stage in the development of cell-based therapy reimbursement should kick in and what value would be put on different stages. That would be a good debate to have.

Moving on from that, I strongly support the amendment tabled by the noble Baroness, Lady Emerton, on the inclusion of the Chief Nursing Officer. I also support her in asking why Health Education England does not have a nurse education director. If the nursing workforce is the largest health workforce in the NHS and does not have a nurse education directive, something is missing and needs to be replaced.

17:00

I absolutely support Amendment 60, in the name of the noble Lord, Lord Turnberg. I remember when I was responsible for the research ethics committee. When I took over I was told that there were 152 research ethics committees in England alone, when France, with the same population, had only 35. I asked why, and quickly found out about the problems referred to by the noble Baroness, Lady Cumberlege, and why the delays occurred. Now that we are to have a Health Research Authority, I cannot see why it cannot clear, ethically and every other way, a clinical trial as part of a multi-centred clinical trial. The local NHS trust will have only to make sure that its board and its patient liaison committee are aware that such a trial is taking place. Its ethics committee will not have to go through it, which will reduce the time considerably and might encourage more clinical trials—which we currently have lost—to take place in the United Kingdom.

I turn to Amendments 61 and 62, in the name of the noble Lord, Lord Willis of Knaresborough. He is now at home and recovering. He has been asked to rest for about a month or so, if his family can manage to keep him down, but he is well and his treatment is going well. His son sent me an e-mail about it; our good wishes are doing the trick. Amendment 61 merely says that those who deliver patient care for NHS patients should be treated in the same way as NHS trusts. That cannot be wrong. Surely there is an omission. Amendment 62, to which the noble Lord, Lord Turnberg, referred, replaces “have regard to” in the Bill with “comply with”. What does “have regard to” mean? Surely those bodies must have to comply with directions given by the HRA. I hope the noble Earl will respond to that.

[Baroness Jolly]

I will speak briefly in support of Amendments 59, 61 and 62. We have had this debate about lists—sometimes they are good, and sometimes not. There is no way of knowing when they are good and when they are not. However, I welcome the additions suggested in the amendments, in particular the amendment in the name of the noble Baroness, Lady Emerton, on the Chief Nursing Officer. That is absolutely critical. Everybody knows about doctors, but the amendment sends out the key message that nurses play a role in collecting an evidence base to improve care for patients. That is very important. I have seen some very nice research done by nurses, who work in the community, about care. That really makes a difference and, of course, it is then shared among their colleagues.

I will also speak briefly to Amendments 61 and 62, in the name of my noble friend Lord Willis. These are about the guidance that the HRA produces and who should pay heed to it. Here we have a mini-list, but the not-for-profit and private sectors were missing from it. Anybody who does work for the NHS should be included. The wording should be strengthened from “have regard” to “comply with”. It currently makes no sense whatever. I would be grateful if the Minister can confirm that.

[Lord Turnberg]

My Lords, I am sorry to rise again, but I have a very brief question. In a clause dealing with promoting regulatory practice, why is the Secretary of State No. 1?

[Earl Howe]

My Lords, a great many points have been raised in this debate, so I may take a little time to respond. I hope that the Committee will bear with me. Amendments 58B to 62 seek to give the Health Research Authority a stronger role in streamlining the management of research, particularly in the NHS. I am the first to recognise that delays in obtaining research approvals in the NHS remain a problem for many researchers and that there is an expectation that the Health Research Authority will help to improve this situation through its relationship with the NHS.

I also appreciate that noble Lords, particularly in relation to Amendments 61 and 62, seek reassurance that all providers of NHS services will be required to pay attention to the guidance that the authority is required to produce under Clause 98(6). This issue was highlighted by both the Academy of Medical Sciences and the Wellcome Trust during pre-legislative scrutiny of the Bill. The clauses in the Care Bill would give the Health Research Authority a unique, free-standing duty to promote the co-ordination and standardisation of practice in the UK relating to the regulation of health and social care research. At this point I reassure the noble Lord, Lord Turnberg, that the duty of co-ordination and standardisation necessarily involves co-ordinating and standardising the practice of NHS trust research and development committees.

In addition, the Health Research Authority will have a reciprocal duty to co-operate with other regulatory bodies or individuals that have statutory functions in the regulation of health and social care research. Statutory functions are an important point. I take this opportunity to address the three amendments listed here that are concerned with this duty. In doing so, it is important to explain why Clause 98(1) would place a duty of co-operation on the HRA and in particular the Chief Medical Officer of the Department of Health. The reason is that the Chief Medical Officer holds functions relating to research under the Abortion Regulations 1991. These require notice to be given to the Chief Medical Officer of any abortion and any information relevant to it.

The disclosure of such information is restricted, except in specific circumstances, which include disclosure for the purposes of scientific research. The Chief Medical Officer is responsible for determining whether disclosure can be made. It is because of the Chief Medical Officer’s functions in approving the disclosure of information about abortions for the purposes of scientific research that the authority, the Chief Medical Officer and the bodies and individuals listed must co-operate with one another with a view to standardising and co-ordinating practice relating to the regulation of health and social care research. Similarly, other bodies and individuals listed have functions relating to the regulation of health or social care research. So it links in those statutory functions.

I listened with great care and a great deal of understanding to the noble Lord, Lord MacKenzie, my noble friend Lady Cumberlege, the noble Baroness, Lady Emerton, and others on their wish to expand the duty of co-operation to include the Chief Nursing Officer. The Chief Nursing Officer is an NHS England role, while the Department of Health has a director of nursing. Neither of these posts has any statutory functions relating to the regulation of health or social care research. That is the key point. For this reason, Clause 98(1) does not create a duty of co-operation on the HRA either with the Chief Nursing Officer of NHS England or with the Department of Health’s director of nursing and the bodies and individuals listed in Clause 98(1). I hope that this explanation is helpful.

On Amendments 58B and 58C, the medical royal colleges, the General Medical Council, the General Dental Council and the Nursing and Midwifery Council do not have such statutory functions in this context either. The noble Lord, Lord Walton, made an important and powerful point about the GMC. However, the Health Research Authority would have powers, under paragraph 13 of Schedule 7, to work with the GMC and the other medical regulators to help and advise them in their work. That, I hope, will reassure the noble Lord that that aspect of the HRA’s work has not been forgotten about.

Amendment 60A would require the Health Research Authority to assess the impact of proposed changes to the system for setting pharmaceutical prices on health and social care research. I pay tribute to the noble Lord, Lord Hunt, for introducing this extremely interesting topic to our debates. I believe that this function is best undertaken by the National Institute for Health and Care Excellence rather than making it part of the authority’s role in promoting the co-ordination and standardisation of regulatory practice. As he will know, we have already announced that NICE will play a central role in the pharmacoeconomic evaluation of new medicines in the context of the framework for value-based pricing, once that is announced.

The noble Lord made a point about value-based pricing, in that it is important for the Government—I agree with him—to take account of the need to attract investment into this country. As set out in our plan for growth and our Strategy for UK Life Sciences, the Government are absolutely committed to ensuring that the UK continues to offer an environment that supports and encourages investment and innovation by the life sciences sector, and where the NHS is a world leader in clinical trials. However, there are some legitimate points of debate here about the impact of medicine prices on companies’ decisions on where to locate investments or conduct research. As highlighted in the 2007 NERA study, Key Factors in Attracting Internationally Mobile Investments by the Research-Based Pharmaceutical Industry, this is a global market. Companies locate where they can find the best science base at reasonable cost, taking into account other factors such as taxation, flexible labour markets and economic stability. It is not self-evident that the pricing of medicines drives decisions of this kind. It is an interesting debate to have, but perhaps it is one for another occasion.

The noble Lord also asked about the cancer drugs fund. It is very heartening that more than 30,000 patients in England have now benefited from that fund, which in total amounts to £650 million over three and a half years. We are committed to building on that success. In the context of developing new pricing arrangements for branded medicines, I can reassure the noble Lord by saying that we are exploring ways in which new patients can benefit from innovative cancer drugs at a cost that represents value to the NHS. NHS England is very much included in that discussion, and we well appreciate how important it is for patients.

To meet the duty of co-operation in this whole area, the Health Research Authority will be required to take the lead in actively identifying ways in which to remove duplication, streamlining the regulation of health and social care research and seeking to ensure that regulation is proportionate. At this point, I reassure noble Lords that the authority must facilitate all types of high-quality ethical research, including research that is multidisciplinary in nature and research by multiprofessionals. In keeping under review matters relating to the regulation of health or social care research, the authority may provide advice to the Secretary of State and must do so on request. Such advice could include recommendations to improve the regulatory landscape for research.

The existing Health Research Authority, the Special Health Authority, has already begun an ambitious programme of work to speed up the research journey in the UK, including the creation of a unified approval process and consistent, proportionate standards for compliance and inspection. I hope that will be welcome news to the noble Lord, Lord Patel, in particular. In doing so, it is working closely with other bodies, including representation from the NHS, to identify and implement effective solutions to make it faster and easier to initiate research.

17:15

Clause 98(6) requires the HRA to publish guidance setting out principles of good practice in the management and conduct of health and social care research, and any statutory requirements that people conducting such research are subject to. This guidance would replace current guidance issued by my department, the research governance framework.

Amendments 61, 61A and 62 are concerned with the bodies that this guidance will apply to and how it will relate to them. This guidance will be applicable to anyone managing or conducting health or social care research. The HRA will be the authoritative voice that brings together and disseminates what is good practice. Having heard that the main residual barrier to research in the health service is at the level of the trust, as I believe many noble Lords are well aware, we have sought to strengthen the status of the HRA’s guidance by requiring NHS trusts and NHS foundation trusts to have regard to it.

My noble friend Lady Jolly and the noble Lord, Lord Patel, questioned the strength of that provision. The duty to have regard to the guidance shows that the guidance must be given great weight; it is not mere advice that its addressees are free to follow or not as they choose. It means instead that, in this case, NHS trusts, NHS foundation trusts and local authorities that provide or arrange care will be under a duty to consider with great care the guidance published by the HRA and will be expected to follow it unless they have very clear and cogent reasons for not doing so. The legal meaning of “have regard to” has been interpreted in the courts to mean that such guidance must be followed by those to whom it is addressed unless there are clear and cogent reasons for them not doing so. In fact, providers, including private providers of NHS services, can be required to have regard to the guidance by placing conditions within their operating frameworks and contracts, for example. In the final analysis, this matter could also be subject to judicial review.

The noble Lords, Lord Hunt, Lord Turnberg and Lord Patel, spoke about multicentre research and the HRA’s role in that context. The Health Research Authority special health authority already has a programme of work to enable the implementation of a unified approval process, as I have mentioned. This programme includes a feasibility study with a number of pilots to test the effect of rationalising and combining elements of NHS study-wide review with elements of the research ethics committee review into a single HRA assessment. The findings are expected to identify and show how to realise potential to improve both study set-up times and the quality and consistency of review. We expect this work to continue.

The guidance is also extended, as I have mentioned, to local authorities. Given that the HRA’s remit will now also extend to social care research, the statutory duty to have regard to the authority’s guidance means that these bodies must consider the guidance with great care. It will be expected that they will follow such guidance, as I have explained. We are not seeking to establish the HRA as an inspectorate with enforcement powers. Such powers would be required if a statutory duty to follow guidance were to be imposed on private providers, because there would have to be an express enforcement mechanism, such as powers to apply a sanction, if these providers failed to have regard to the guidance.

The existing special health authority is demonstrating, I believe, another way of working. A great deal can be achieved by working and co-operating with others. It is collaborating with its stakeholder community, including the NHS, charities and the private sector. For instance, securing buy-in through early engagement was key to the successful adoption of the integrated research application system by all research approval bodies across the whole of the UK. We want the HRA to continue to put that spirit of co-operation into practice and to get support for the guidance that it will be required to produce.

Giving the HRA powers to take enforcement action would be counterproductive if it made it more difficult for the authority to take a collaborative approach to carrying out its work and fostering informed support among the range of stakeholders. However, a number of mechanisms may be used as a means to secure compliance with the research governance framework. I have already mentioned contracts. Funding for research may be conditional on ensuring compliance with the framework. Compliance with the current guidance has also been achieved through the system of care regulation, so there are various ways in which to achieve what the noble Lord, Lord Patel, and no doubt my noble friend Lady Jolly, wants to achieve.

The Care Quality Commission’s guidance about compliance lists applicable publications, including the research governance framework. The guidance about compliance states that providers should reflect the key expectations of listed publications for their service as they relate to the essential standards of safety and quality. There is no reason why these mechanisms could not continue to be used to achieve compliance by providers commissioned to deliver services for the NHS or local authorities.

I hope that I have provided reassurances on the issues raised by this group of amendments. With those reassurances, I hope that the noble Lord will feel able to withdraw the amendment.

[Baroness Emerton]

I return to Amendment 59 and thank the Minister for explaining that there is no statutory requirement in this regard relating to the Chief Nursing Officer or the director of nursing. In the light of the comments that have been made about research and nursing this afternoon, will the Minister look at how we can take forward nursing research? If the structure is wrong for NHS England and the director of nursing for public health, where can we fit in a statutory requirement for research to be included? We cannot go on without having a means of recognising the importance of evidence-based practice based on research.

[Earl Howe]

My Lords, I heard very clearly a strong message from noble Lords on that point. Indeed, I recognised the noble Baroness’s strength of feeling in our earlier debates on Health Education England. Having noted that strength of feeling, I would like to engage with noble Lords between now and Report to see what avenues we can pursue in this area. I cannot make a specific commitment now, but I am very happy to talk further about these issues.

[Lord Turnberg]

I bring the noble Earl back to Amendment 60 on the research and development committees of NHS trusts. He made some very reassuring comments about the work that is going on in the HRA to try to unify this area. One of the difficulties at the moment is that the foundation trusts are a law unto themselves to a large extent and jealously guard their independence. I wonder whether we need to strengthen the HRA’s arm by including something about this area in the Bill.

[Earl Howe]

I understand the issue that the noble Lord has raised. There are a number of ways of exercising leverage on foundation trusts, if I can put it in that rather impolite way. One of them relates to the funding from the National Institute for Health Research. The noble Lord may well be aware that as from 1 April that funding is conditional on the 70-day timeline for the recruitment of the first patient into a trial. If that timeline is not met, the funding does not follow. I can tell the noble Lord that that has concentrated minds rather effectively across the health service, including in foundation trusts, towards achieving a much more efficient and effective decision-making process.

I am aware that I did not answer a question from the noble Lord, Lord Patel, about rationalising the number of research ethics committees, which may well bear upon this issue in another sense. The HRA and its predecessor have made good progress in reducing the timelines for ethical approval, something that stakeholders have recognised. The current special health authority feasibility study is looking at how to address other delays whereby trust decisions can be made based on their capacity and capability to take part in research. This is ongoing work. I come back to my point about the core function of the HRA, which is, above anything else, to protect the interests of patients and the public. It might not be advisable to load on to it too many other roles that could detract from that core function.

[Lord Hunt of Kings Heath]

My Lords, I am grateful to the noble Earl for that comprehensive response. I cannot help thinking that in order to protect the patient and the public there must be recognition that high-quality research is one of the best ways to enhance the quality of patient care. I remain concerned that bodies in the NHS still do not understand the importance of getting their act together in research approval. That does not mean that they do not have to go through a thorough process, because there clearly has to be a rigorous process to protect the public. I would like to see stronger language in the Bill that essentially allows the HRA to intervene if undue delays take place. I hope that we can return to that on Report.

I am grateful for the noble Earl’s comments on value-based pricing. All I would say to him is that I have been disappointed that there has been a great lack of public debate on this matter. I know that the department is shortly to publish further work. It is essential that these ideas are tested, and I am concerned that this is going to be simply a matter of negotiation between his department and the industry without there being a wider discussion of the implications. I appeal to the noble Earl for some opportunity on that.

Finally, the Minister has made it clear that the list in the clause represents bodies concerned with regulation, and that is now well understood. I come back to the question raised by the noble Baroness, Lady Emerton: is there not a case for another clause stating that there is a general duty of co-operation? There is an argument that while, of course, you have your statutory regulators which need to co-ordinate their efforts, you also want a lot of organisations and people to be involved, including the Chief Nursing Officer and the Director of Nursing at the department. I put that forward as a suggestion and beg leave to withdraw the amendment.

Amendment 58B withdrawn.

Amendments 58C to 63 not moved.

Clause 98 agreed.

Clauses 99 and 100 agreed.

Schedule 8 agreed.

Clauses 101 to 104 agreed.

17:30

Amendment 64

Moved by

[Lord Patel]

64: After Clause 104, insert the following new Clause—
“Human Tissue and Embryo Authority
(1) There shall be a body corporate called the Human Tissue and Embryo Authority.
(2) The Authority shall consist of—
(a) a chairman and deputy chairman, and(b) such number of other members as the Secretary of State appoints.(3) The Authority shall keep proper accounts and proper records in relation to the accounts and shall prepare for each accounting year a statement of accounts.
(4) The annual statement of accounts shall comply with any direction given by the Secretary of State, with the approval of the Treasury, as to the information to be contained in the statement, the way in which the information is to be presented or the methods and principles according to which the statement is to be prepared.
(5) Not later than five months after the end of an accounting year, the Authority shall send a copy of the statement of accounts for that year to the Secretary of State and to the Comptroller and Auditor General.
(6) The Comptroller and Auditor General shall examine, certify and report on every statement of accounts received by him under subsection (5) and shall lay a copy of the statement and of his report before each House of Parliament.
(7) The Secretary of State and the Comptroller and Auditor General may inspect any records relating to the accounts.
(8) In this section “accounting year” means the period beginning with the day when the Authority is established and ending with the following 31st March, or any later period of twelve months ending with the 31st March; and Schedule 1 to this Act (which deals with the membership of the Authority, etc) shall have effect.
(9) The Authority shall prepare—
(a) a report for the period beginning with the 1st August preceding the day when the Authority is established (or if that date is a 1st August, beginning with that date) and ending with the next 31st March, and(b) a report for each succeeding period of 12 months ending with 31st March.(10) The Authority shall send each report to the Secretary of State as soon as practicable after the end of the period for which it is prepared.
(11) A report prepared under subsection (9) for any period shall deal with the activities of the Authority in the period and the activities the Authority proposes to undertake in the succeeding period of twelve months.
(12) The Secretary of State shall lay before each House of Parliament a copy of every report received by him under subsection (10).
(13) The following provisions of the Human Fertilisation and Embryology Act 1990 are repealed—
(a) sections 5 to 10, and(b) section 11(1)(a) and (aa).(14) Save for the provision in subsection (13), references in the Human Fertilisation and Embryology Act 1990 to “the Authority” shall be taken to be references to the Human Tissue and Embryo Authority.
(15) The Care Quality Commission may grant the following licences—
(a) licences under paragraph 1 of Schedule 2 to the Human Fertilisation and Embryology Act 1990 authorising activities in the course of providing treatment services,(b) licences under paragraph 1A of that Schedule authorising activities in the course of providing non-medical fertility services.(16) Sections 12, 13 and 13A of, and paragraph 4 of Schedule 2 to, the Human Fertilisation and Embryology Act 1990 have effect in the case of all licences granted under subsection (15) as they would do for licences granted under that Act.
(17) Section 13 of the Human Tissue Act 2004 is repealed.
(18) Save for the provision in subsection (17), references in the Human Tissue Act 2004 to “the Authority” shall be taken to be references to the Human Tissue and Embryo Authority.
(19) In Schedule 5 (power to modify or transfer functions) to the Public Bodies Act 2011 omit—
(a) the entry for the Human Fertilisation and Embryology Authority, and(b) the entry for the Human Tissue Authority.”

[Lord Patel]

My Lords, I rise to speak to this amendment in the name of the noble Lord, Lord Willis of Knaresborough, with some trepidation. It is not because I do not strongly support his amendment, but because I hope that I can do justice to it with the kind of passion that he would have demonstrated when presenting the argument if he had been here. However, I have no doubt that while resting in his bed, he has probably turned on BBC Parliament and is watching to see that I do the task adequately.

I think the reason why the noble Lord, Lord Willis, has demonstrated such passion is because he recognises that there is a need to reduce bureaucracy. Too many regulatory bodies mean more bureaucracy. To give an example, we have the second-highest number of competent authorities in the EU. Joint highest are Poland, Romania and Italy. However, on top of that, we have more regulatory authorities—over a dozen—than any other EU country. I see noble Lords look rather surprised, but I believe that to be true.

One issue is reducing unnecessary regulatory bodies. Another issue is reducing bureaucracy. The third issue is reducing duplication. The Human Fertilisation and Embryology Authority’s key role is to improve clinical services related to patients with fertility problems. The key reason that the authority was set up, following the birth of Louise Brown, was to reduce public anxiety about in vitro fertilisation. No such public anxiety now exists related to in vitro fertilisation.

Further functions were added to that authority in terms of embryo research. There may still be a need for that, but a reducing one. To give an example, we have enough clinical grade embryonic stem cell lines to last us a century and supply the world. I think the derivation of more embryonic stem cell lines is probably unlikely, unless there is some kind of major breakthrough. Research on embryos and embryonic stem cell lines is also now slightly superseded by induced pluripotent cells, dendritic cells and adult cells. However, I agree that there might still be a need for some embryo research and that function needs to remain.

The duplication is likely because the CQC will have a licensing role for those trusts that provide clinical services in infertility. Of course, I accept that the majority of infertility services relating to in vitro fertilisation—and I have no doubt that the noble Lord, Lord Winston, who is listening to me carefully, will correct me wherever I go wrong—are in the independent sector. Unless that service is provided for an NHS patient, the CQC does not have a role, and there must be a way of overcoming that. If we do not overcome that, the services provided within the NHS will run the risk of duplication of effort by the Human Fertilisation and Embryology Authority and the CQC.

There is also a fourth argument, and that is the reduction of cost. The noble Lord, Lord Willis, wrote a letter to the Times asking why all these regulatory authorities have a whole army of communication officers. What do they communicate? Why do they need so many? The noble Lord referred to the cost, and there are also other back office costs that are increased unless we reduce the number of regulatory authorities. His proposal is that there should be a reduction and that a body called the Human Tissue and Embryo Authority should be established rather than the HTA and the HFEA. The noble Lord lists where the changes would be required in their functions and in subsection (15) sets out the role of the Care Quality Commission to streamline all these efforts and reduce costs.

It is interesting that initially, in an attempt to reduce the number of quangos, the Government in the Health and Social Care Act decided that the HFEA and the HTA, with other quangos, would be abolished. Now, with the high profile of patient safety, we wonder whether some of the others should have been abolished. If I remember correctly, we debated the HFEA and the HTA during the passage of the Health and Social Care Bill and, in fact, we had a Division on it.

However, the Government decided to go to consultation, and I understand that Justin McCracken has been commissioned to review the operating functions of the HFEA and the HTA to see how they might deliver greater efficiencies. I think that this amendment, in the name of the noble Lord, Lord Willis of Knaresborough, would deliver those efficiencies, and I should be interested to know whether the Minister agrees that this would be a better way forward in dealing with the Human Tissue Authority and the Human Fertilisation and Embryology Authority. I beg to move.

[Lord Warner]

My Lords, I rise because I gave an assurance to the noble Lord, Lord Willis, that I would speak on this amendment as I have form, as they say, in this area.

Ten or so years ago, when one person accused me of being rather like Vlad the Impaler and we were slaughtering, as well as merging, a number of quangos, two of the candidates for merger were the Human Tissue Authority and the HFEA. Much of the argument for doing that was very similar to the argument that the noble Lord, Lord Patel, has advanced, although I did not know as much then as I know now about the number of bodies that we had compared with other countries regulating in this area. However, I assure the Committee that we had a lot more in 2003-04. Therefore, there is a case for this merger, and it has been made.

By backing away from this merger in the face of the arguments that were put forward, I ceased to be Vlad the Impaler and became Warner the Wimp. To their credit, this Government decided to have another go, but they seemed to get themselves in roughly the same position as Warner the Wimp and withdrew. Really, they withdrew because at the end of the day the savings were—certainly so far as I was concerned—not significant compared with some of the other savings that could be made. However, we have grown to appreciate more the importance of health research and the role of the life sciences in our economy, and I think that there is still a case for going the extra mile, when you can, to streamline the regulatory system in this area.

I hope that the Government will look sympathetically on this amendment, even if they do not want to accept it in its present form. I hope that some of us speaking out on this in the review will give the Government some courage to be a bit braver than they were, and than I was, in the past. Therefore, I support the spirit and the ideas behind this amendment.

[Lord Winston]

My Lords, I fear that I have to support the noble Lord, Lord Patel, on this amendment, even though I do not think it goes far enough. In my view, the case for having a Human Fertilisation and Embryology Authority at all is now quite dubious. It is 20 years or more since this treatment was established. There is no longer public anxiety about it, as there was in 1990, when the Act was introduced. It is now a regular treatment. As long as this treatment is licensed in this way, it will look like a maverick treatment to people—something extra, outside the health service.

One issue is that, sadly, these treatments are affordable only in private practice. Of course, the health service has done a good deal towards trying to supply them, but as the noble Earl knows, there are many examples where people pay very large sums in the private sector for these treatments and they are not and cannot be regulated. If one was really going to be serious about regulating in vitro fertilisation, the first thing that would be needed to prevent couples being exploited would be to find a way to reduce the massive burden of cost, which is out of proportion to the actual expense of the treatment. That is really something that needs to be looked at.

Sadly, the HFEA has not performed particularly well in the areas of research. I would like to recount briefly as an example the last licensed inspection of my own laboratory where we conduct experiments on embryos where there is no possibility of those embryos being transferred to a human patient. They are of course effectively dying in culture. It is extraordinary how stringent the last inspection was with regard to the quality of our laboratory. Why our laboratory should be seen to be more up to a particular standard than others doing cell culture work was beyond my comprehension given the fact that these cells, under no circumstances, could be used for human treatment: they were simply to investigate a phenomenon.

I could not help wondering whether in fact that particular inspection committee was being vituperative, because it had heard me speak against the HFEA at a previous debate in the House of Lords. I have no idea about that. But certainly, given that the previous year we had had a gold standard approval for our methods, I have to say that the inspection process is a patchy one. The problem really is that, currently, the HFEA licenses treatments that are practically research procedures that have not been validated and which are being charged to patients.

There are many examples of anomalies that are worrying. The noble Earl may have seen this week a full-page advertisement for egg sharing at a London private clinic. Incidentally, that clinic has been run by a member of the HFEA. One cannot help but feel that this is a shocking conflict of interest given that egg sharing is somewhat difficult to justify in certain circumstances as poor women may be persuaded to give their eggs under situations that are perhaps not ideal for them. They may in fact end up with someone else getting treatment at their mental expense—not their physical expense because they get a free treatment—and then 20 years later finding a child they do not even know about trying to trace them because of the information shown on our birth certificates. That anomaly has never been worked out.

I am really very surprised, too, that no serious attempt has been made to bar clinics that seek to send patients overseas for treatments that are not allowed in this country. There are many examples where patients are sent for various treatments where they might receive more than two embryos at a treatment, which would be against the regulations in this country, but they can come back and give birth to their triplets on the National Health Service. Clearly, that is an anomaly.

While I have absolutely no axe to grind about good private practice, there is no question that sometimes there are issues where clinics advertise wares that are unjustified. That happened two weeks ago when a clinic announced that it now had a treatment that could improve the success rate threefold. Of course, if I as a medical practitioner said that to the press, I could be held in front of the General Medical Council for advertising. But a clinic can get away with that kind of approach if it is not actually being mentioned by a medical practitioner.

The real reason for wanting to see at least some slimming down—we may need to come back to this at the Report stage to see exactly what clauses would be eliminated; it is difficult to see the whole of this rather large amendment now—is that at some stage in the near future we should revisit the Act of Parliament to see what would be best for purpose. In the mean time, however, there is a great deal of force in agreeing to slim down the number of regulatory authorities. As everyone across the House knows, regenerative medicine is one of the great opportunities for British medicine. At the moment, one may have to apply to up to 10 different regulatory authorities to get full licensing for the sorts of procedures one might want to follow for research, particularly where animal research may have to be done in parallel. That seems to be a very inhibitory process and there is evidence that it is preventing many bright people going into this research. They need to launch their PhD projects in other ways as quickly as possible.

While the amendment of the noble Lord, Lord Patel, is not perfect, slimming it down like this is a good start and an opportunity. I am also delighted to hear that the noble Lord, Lord Willis, who would have moved this amendment with the noble Lord, Lord Patel, is on the mend. That is good news about an outstanding parliamentarian. If the amendment were to be pressed, I would wish to vote for it.

17:46

[Lord Walton of Detchant]

My Lords, it pains me to oppose this amendment because the noble Lords, Lord Willis, Lord Patel and Lord Winston, are people for whom I have the highest possible regard. Each in their own way has made outstanding contributions to issues relating to medicine and science in your Lordships’ House. Almost invariably, we have found ourselves singing the same tune, if perhaps sometimes in slightly different keys. Having said that, however, I am opposed to the amendment because I thought that this battle had been won two years ago. Admittedly, when this Government came into office, they embarked on what they called the “bonfire of the quangos”. A huge number of quangos were abolished, but after careful consideration and an attempt to merge these two bodies, the decision was made that they should continue to function independently.

Let me give my reasons for taking this view. When I came to this House in 1989, my baptism of fire was the Human Fertilisation and Embryology Bill that later became an Act. It was based upon the Warnock report. The function of the Bill was to create a Human Fertilisation and Embryology Authority that would license bodies and scientists working on research into the human embryo up to 14 days after fertilisation with, first, the objective of improving the treatment of infertility and, secondly, of helping in the prevention of inherited diseases. The noble Lord, Lord Winston, and others were among those who were eventually extraordinarily successful in carrying out the procedure known as pre-implantation diagnosis in order to detect embryos which were likely to cause serious human diseases. That was a very important development.

Subsequently, several other amendments were introduced—and I was deeply involved in those debates in your Lordships’ House—so that the licence could allow people to embark on research with these objectives and to address the important and crucial issue of carrying out research into the treatment of human disease. That in turn led to the development of the mechanism for creating stem cells for the treatment of human disease. There has been a series of progressive amendments that have been fully debated in your Lordships’ House. Now we are faced with the very exciting prospect, following an extensive period of consultation, whereby embryos can be created by pronuclear transfer derived from women who are likely to pass on devastating mitochondrial genetic mutations to all of their children of both sexes. The consultation is now complete and we can look with hope towards the prospect of the regulations to allow those embryos to be implanted being introduced into your Lordships’ House. This is a crucial development. I agree entirely with certain things that the noble Lord, Lord Winston, has said—the Human Fertilisation and Embryology Authority has not functioned as effectively as it might. However, his criticisms were largely concerned not with the potential merger but with the actual performance of the body as an authority.

I was also heavily involved in the debates in your Lordships’ House on the formation of the Human Tissue Authority. This body arose as a result of the so-called Alder Hey scandal where a huge number of human brains and other organs were kept in the hospital without the permission of the families. Of course, it was not recognised in many debates at the time that certain members of the medical profession held a widespread, ill-founded belief that once permission was given by a family for a post mortem examination it was proper to retain organs. That belief was partly based on the fact that to establish a diagnosis after a post mortem examination it is essential that certain organs are fixed in formalin before they can be studied and before the diagnosis can be confirmed. This is crucial. As a result of the so-called Alder Hey scandal the Human Tissue Authority was established. It has the authority to license anatomy departments to handle human organs and pathology departments to study human samples, both full organs and biopsy specimens. It has the authority to license organs being used for transplantation purposes and many similar functions. These departments in universities and hospitals are licensed by the HTA.

The function of these two bodies is entirely different and I do not believe that it is sensible—even in the attempt to create another quango which brings together two quangos—to merge them. The new body would undoubtedly have to create two sub-committees, one to look at human fertilisation and embryology and another to look at the issues of human tissue and the retention of it. I therefore do not support this amendment.

[Lord Patel]

I disagree with my noble, respected and even revered friend Lord Walton of Detchant. He fundamentally fails to understand this amendment. It does not remove the research functions of the Human Fertilisation and Embryology Authority. I have spoken strongly in the past about embryo research, including cell nuclear transfer and mitochondrial research. It is the authority that has held up for so long the progress in mitochondrial research. We should have been doing something about it at least 18 months ago. This amendment does not remove that function, nor does it remove the functions of the Human Tissue Authority, but by amalgamating these functions we can better promote research. The authority and functions of the Human Fertilisation and Embryology Authority—and now we are entering into a science debate, which is not the purpose of the Bill—stop once it gives a licence to do specific research on an embryo. Once the embryonic stem cells are created it has no authority over how those cells are used. Once the cells are used to create a tissue for research it does not have any authority, but the Human Tissue Authority may do. By amalgamating the two you are co-ordinating this research function and maybe improving it. I hope that my noble and revered friend accepts that explanation.

[The Lord Bishop of Chester]

My Lords, having listened to these distinguished doctors taking different points of view on this subject, I fear that I might lower the tone of the debate. However, I think that my money is with the noble Lord, Lord Walton of Detchant. There is a world of difference morally between research carried out on tissue taken from a dead body and research taking place on living tissue which has the potential to be a human being in one way or another. People will argue about when life begins and those arguments can be very sensitive and very divisive. That is why there is separate legislation on research and on therapeutic techniques involving eggs fertilised outside the womb. Whether one likes it or not, if you put together the Human Tissue Authority and the HFEA you will create an impression that you are just dealing with dead matter or whatever, just a lump of cells. That is the impression that will certainly be given psychologically, even if in practice one could construct the unified authority in a way that had the two legs.

It may well be that one needs to revisit this area. The noble Lord, Lord Winston, speaks with such authority that I am very reluctant to take a different view. However, he seemed almost to be arguing for greater regulation rather than no regulation. I would be very reluctant to see a free market in implanting more than two embryos into women in this country, for example. The 14-day rule, which may be an irritant to researchers, was fought over and discussed at great length. To those of us who have quite a few reservations in this area, that is at least a line in the sand. I think that this area needs to be considered on its own merits and, notwithstanding the arguments quite rightly put by the noble Lord, Lord Patel, I am with the noble Lord, Lord Walton.

[Lord Patel]

Stem cells are not dead cells: they are immortal cell lines, such as the HeLa cells on which scientists have been doing research for decades. These cells were taken in 1951 from a woman called Henrietta Lacks—that is why they are called HeLa cells—and they are still alive. Most cancer research is done, and many drugs produced, using HeLa cells. They are immortal, living cells.

[The Lord Bishop of Chester]

My Lords, as St Paul once said, I speak as a fool. However, is there not a difference between stem cells that are alive in that sense and a fertilised egg that is alive in a different sense?

[Lord Walton of Detchant]

I intended to say, but did not, that the two different bodies’ areas of authority collide when you deal with stem cells, because they are derived from embryo research but then become cells that are used for tissue research and transplantation and so on. That is where they collide. That does not necessarily mean that it is crucial to merge the two authorities.

[Lord Warner]

My Lords, at the risk of lowering the tone even further, perhaps I may just take us back and slightly challenge the noble Lord, Lord Walton, which I do not normally do. I also took the Human Tissue Act through this House. I am well seized of the circumstances that we faced then. At the time, I was bombarded by the research community with their concerns about setting up that body and whether it would be another obstacle to research. They recognised that this country had to do something in legislation in terms of the EU directive on human tissue. We were caught between a rock and a hard place. We had to do something about the EU directive; we had all the concerns about what had happened in Liverpool; but we were also conscious that we needed to ensure that we did not put another set of barriers in the way of medical research.

When we were considering the merger of the Human Tissue Authority and the HFEA we were very strongly of the view—which is very similar to what the noble Lord, Lord Patel, has said—that there was not a great deal of difference between the nature, if I may put it that way, of the matter being used for research under the aegis of those two regulatory bodies. In some cases, human tissues were themselves living cells being used for research, and we did not regard that as fundamentally a different type of matter from the one that is regulated for research purposes by the HFEA. I cannot even brag of an O-level in science—“Shame on you, Warner”, says Michael Gove. But in my lay view we had a situation where the advice we got from the scientists was that having two bodies was likely to be a greater impediment. There was a case on savings grounds—back-office services etc; the kind of issues that the noble Lord, Lord Willis, mentioned in his letter to the Times—but there was also a science argument for putting the two bodies together.

18:00

[Baroness Thornton]

My Lords, it is a great pleasure to be back on the Front Bench as part of my noble friend’s health team, even if it is for a short time. I join other noble Lords in sending best wishes to the noble Lord, Lord Willis, for a speedy recovery.

As noble Lords will know, I have been interested in the future of the HFEA and HTA both as a Minister and during the course, in the early days of this Government, of the slash and burn Public Bodies Act, which both these bodies survived. The idea of merging the HFEA and HTA is not new, as my noble friend Lord Warner said, and has been rejected on more than one occasion. I am puzzled by the noble Lord, Lord Patel, raising it now, especially in the middle of yet another review. What I waited to hear, particularly from noble Lords with scientific and research backgrounds, was what the public thought. The right reverend Prelate was right when he said that this is also about how people feel about these issues, not just how the great doctors and scientists think things should be done. In fact, that was how we started out with all these issues.

As my noble friend Lord Warner said, this was first raised by my Government. We proposed establishing a new arm’s-length body called RATE—the regulatory authority for tissue and embryos. According to my research, in 2007 the Government wisely decided not to proceed with that following criticism from a Joint Committee set up to scrutinise that draft Bill. The arguments advanced against RATE then were just as persuasive as they are today. Many of us have held that there is little overlap in the work of the two bodies and that the specialist expertise each provides should be maintained to ensure that regulation remains effective and public confidence is maintained. The discussion we have had so far today has not convinced me that this proposal is the best way forward at the moment. The independence of the HTA and HFEA is important for a number of reasons, not least because of the public confidence needed in both the areas they cover.

In 2010, the Government proposed as part of their bonfire of the quangos that the functions of the HFEA and the HTA should be transferred largely to the CQC. Noble Lords will remember the debate about that during the passage of the Public Bodies Act. Following an extensive public consultation, that proposal was also rejected by the Government in January this year. Once more, a clear majority of those who responded thought that the risks involved in such sensitive areas of medicine were just too great. Instead, the Government decided that an independent review of the way the HFEA and HTA carry out their functions should be undertaken by Justin McCracken. I understand that Mr McCracken’s review is complete and Ministers have yet to decide what to do. Perhaps we will have a sneak preview of that today.

Is there new evidence that there is an advantage in merging these two distinct and expert organisations? As I said, they have different roles. According to the brief I was sent, there are fewer than 10 organisations jointly regulated by both organisations. As context, around 130 organisations are regulated by the HFEA and 800 by the HTA across diverse sectors. On these Benches we are nervous that the amendment tabled by the noble Lord, Lord Patel, to merge the boards of both these organisations risks losing specialist expertise held by the HTA and HFEA and the unique roles in law that their respective boards have.

During the committee scrutiny of the Bill in its draft form—as the Care and Support Bill—the committee advised against a full merger of the boards. In its call for evidence, the committee asked for views on precisely this question. As far as I know, respondents unanimously opposed the abolition of either body or the transfer of their functions. The Academy of Medical Sciences replied:

“There is a great deal of support among our community for the HFEA and the HTA; both are perceived as having developed the experience to respond in a balanced, practical way to the changing landscape that reflects the evolving risks and benefits of research. The relatively small savings to be made through disbanding the HFEA and the HTA need to be balanced against the inevitable period of disruption and uncertainty, and any potential risk of loss of expertise, efficiency, effectiveness and coherence that could hinder research and practice and result in the loss of public and professional confidence … We therefore support retaining both the HFEA and the HTA, providing they work closely with the HRA and other regulators to further streamline the regulation, inspection and governance process for patient and public benefit”.

I accept precisely the point made by my noble friend Lord Winston and others that there are unnecessary delays and that there are clearly issues to be addressed in the way that these bodies operate.

The committee concluded that Ministers should not have the power to abolish the HFEA or HTA and recommended that the relevant clause should be deleted. While its conclusions were about abolition, these same points apply to the merger of the boards: expertise would be lost, there would be huge disruption and all for relatively tiny cost savings at the moment. The work of the HTA and HFEA is of enormous scientific and ethical importance. We accept entirely that there is always room for improvement and we should never be complacent. The review led by Justin McCracken will no doubt make recommendations for further efficiencies. We would be jumping ahead of his proposals by agreeing this amendment at this time.

[Earl Howe]

My Lords, this has been a very instructive debate and one to which I have listened with enormous care and interest. It takes us back to a well-worn area, as noble Lords have been keen to point out. The amendment proposed by the noble Lord, Lord Patel, would abolish the HFEA and HTA and replace them with a new regulatory body, the human tissue and embryo authority. It would also transfer responsibility for the regulation of infertility treatment involving embryos, sperm and eggs to the CQC.

I listened with great care, as I always do, to the noble Lord, Lord Patel, when he moved the amendment. As has been amply demonstrated in the course of this debate, the prospect of the merger of the HFEA and HTA, or of the transfer of their functions elsewhere and the subsequent abolition of the two bodies, is by no means a new one. It has been considered carefully and consulted on on a number of occasions over recent years, including by Members of this House.

In 2007, as we were reminded, a Joint Committee of both Houses of Parliament, chaired by my noble friend Lord Willis, considered a proposal to replace the HFEA and HTA by the regulatory authority for tissue and embryos—RATE. The committee roundly rejected that proposal. It recognised concerns expressed by stakeholders about the risk of losing the specialist expertise that the HFEA and HTA individually hold and the small extent to which the two bodies actually cover common ground. That point was made very powerfully by the noble Lord, Lord Walton, today.

The Government are as keen as anybody to minimise the number of arm’s-length bodies when we possibly can. A substantial exercise was undertaken across government when the coalition was new to do exactly that and a great number of bodies were abolished. Within that framework, last year the Department of Health undertook a public consultation on a proposal to transfer the functions of the HFEA and HTA to the Care Quality Commission and the Health Research Authority, as part of our review of the arm’s-length bodies. Across the full range of respondents, a majority of three-quarters disagreed with the proposal. The main reason cited was that the HFEA and the HTA have developed considerable expertise in their highly specialised fields. They were said to be trusted and respected by the regulated sectors. Respondents believed that this expertise and trust would be lost were a transfer of functions to take place. That point was well made by the noble Baroness, Lady Thornton, who I am delighted to see on the Front Bench opposite. The noble Lord, Lord Patel, indicated that in his view it was unnecessary to have two separate organisations, but that was not the view of those who responded to the consultation.

Respondents also said that they did not believe that the CQC was well-placed at the time to take on the functions of the two bodies and they feared that those functions would be subsumed by the CQC’s other responsibilities. Another strong message from the consultation was that the small size of the two bodies and the small overall anticipated savings did not warrant the risks involved in abolishing them and transferring their functions. I recall that the noble Lord, Lord Warner, made that very point when we debated these issues during the passage of the Public Bodies Bill. The Government listened to the responses and decided not to proceed with the transfer and abolition. However, we also recognised the clear message from the consultation that there is scope for the HFEA and the HTA to achieve further efficiencies in the way that they operate. That much, I hope, all noble Lords agree on.

The noble Baroness, Lady Thornton, asked whether there was any new evidence about the value of a merger. It was with that very question in mind that we commissioned an independent review of the two bodies by Justin McCracken, former chief executive of the Health Protection Agency, in January this year. The review included looking at the scope for shared membership and leadership of the HFEA and HTA and for their merger. The report of the review was submitted to Ministers in April and is currently under consideration, so I am afraid that I am not in a position to share any conclusions quite yet. I will give way.

[Baroness Thornton]

Will we see the white smoke before we get to Report?

[Earl Howe]

I sincerely hope and anticipate that we will, but I am afraid I do not have a particular date in my brief. If I am able to supply the noble Baroness with that information, I will be happy to do so. The noble Lords, Lord Winston and Lord Patel, cited the number of different regulators involved in the organisational arrangements and the regulation of regenerative medicine in the UK and pointed to the complexity of these arrangements. I understand that point of view, but we are now in a world where the regulators in this area work very closely together to provide regulatory clarity to the sector and to ensure that the system actually works. I know, for example, that the MHRA and the HTA work closely together and have carried out joint inspections.

The department, along with the UK regulators, worked together to produce a regulatory map for stem cell research and manufacture, and I think that too has been helpful. I fully understand and appreciate the interest of noble Lords in this matter and their desire to streamline regulation. We all welcome that aim. I hope that noble Lords will appreciate that the Government have given this matter consideration in some depth, including through public consultations. The strong message we have consistently received from stakeholders is that the HFEA and the HTA should not be abolished or merged or their functions transferred elsewhere. Our latest consideration of this is the scope for regulatory streamlining that the McCracken review looked at, including the scope for regulators to work closely together. That consideration is currently taking place. As soon as the Government’s position on it is determined I will ensure that noble Lords are informed. I am additionally told by a most reliable source that we do not yet have a confirmed date for that announcement.

I am always loath to disappoint the noble Lord, Lord Patel, but I hope he will understand that we did not reach this position without due deliberation and indeed without taking extensive soundings among the stakeholders who are most concerned in this area. I hope he will feel, if not exactly comfortable in withdrawing his amendment, at least satisfied that the matter has been fully debated.

18:15

[Lord Patel]

I thank the Minister for his comments. Of course, I feel satisfied that the matter has been fully explored. No doubt the noble Lord, Lord Willis of Knaresborough, will take note of all the comments made. I thank all the other noble Lords who took part in the debate. I say to the noble Baroness, Lady Thornton, that I look forward to the day when her party brings forward an amendment again to burn the quangos, including the HTA and the HFEA. I look forward to the Minister then being on my side and arguing the point. Until then, I beg leave to withdraw the amendment.

Amendment 64 withdrawn.

Clauses 105 and 106 agreed.

Clause 74 : Warning notice.

Amendment 64A

Moved by

[Lord Hunt of Kings Heath]

64A: Clause 74, page 62, line 7, at end insert—
“( ) “Significant improvement” is to be defined in regulations.”

[Lord Hunt of Kings Heath]

My Lords, we now come to Part 2 of the Bill and particularly to Clauses 74 to 77, which may be described as a failure regime for NHS trusts and NHS foundation trusts. Clause 74 makes amendments to the powers of CQC to issue warning notices to those bodies. Where it appears to CQC that the quality of healthcare services provided by a trust requires significant improvement, CQC will be able to highlight those areas in a new form of warning notice. This will state the reasons for CQC’s view, and it will require improvements in the quality of services to be delivered within a specified time. At the end of that period, CQC must review whether the requirements specified in the notice have been met.

Where CQC is not satisfied, it must decide what further action needs to be taken. In the case of a foundation trust, CQC’s review must include use of its power to require Monitor to put the trust into special administration. Clause 75 extends Monitor’s powers to be able to issue additional licence conditions on foundation trusts when CQC has issued a warning notice. At present, Monitor can make use of these powers only if there is a failure in the governance of a foundation trust.

In the event of healthcare services provided by the trust requiring significant improvement, Monitor will as a result be able to take timely action to make changes to leadership or governance with the intention of securing improvements to those services. Clause 76 will enable Monitor to make an audit to authorise the appointment of a trust special administrator in cases where it or CQC is satisfied that there is a serious failure by an NHS foundation trust to provide healthcare services of sufficient quality and that it is appropriate to make the order. At present, Monitor is able to authorise the appointment of a trust special administrator only in cases of insolvency. Monitor may make an order when it is so satisfied, but must make the order when required to do so by CQC.

Let me say at once that the Opposition support the intention of giving greater emphasis to safety and quality and enhancing CQC’s powers in this area. Of course, we are very much influenced by the report of Robert Francis on Mid Staffordshire. We also welcome the introduction of a single failure regime, focused on quality as well as financial failure. However, I suspect that I am not the only noble Lord to have been confused by the respective roles of CQC and Monitor when reading this Bill. Indeed, I was surprised that the Department of Health boldly claimed in its factsheet that the new failure regime will give regulators clear roles in tackling failure. I must say that I found it anything but clear. The factsheet says:

“The Care Quality Commission … will focus on exposing problems and requiring action while Monitor and the NHS Trust Development Authority … will focus on intervening if a poor-performing provider is unable to resolve the situation working with commissioners”.

To confuse matters further, CQC retains enforcement powers for social care, general practice and independent sector providers. That is going to be very confusing. I also pose the question as to whether there are not going to be significant risks associated with these changes. As Robert Francis made clear, regulatory complexity can contribute to system failings. It is important that we get this right, so there are a number of matters which I would like to put to the noble Earl, Lord Howe.

Does the Minister consider that with this level of complexity, there is a risk of slowdown in the action required to address failures? How will Monitor, CQC and the NHS Trust Development Authority work together to ensure that problems are acted upon? Will Monitor and the NHS Trust Development Authority be able to question CQC’s findings and recommendations? What happens if those three august bodies disagree about whether action is needed? Will Monitor and the NHSTDA be equipped to come to their own views on quality, or do they have to take the view of CQC on trust?

The noble Earl will know that the potential confusion has been examined recently by the Health Select Committee. Indeed, the Secretary of State explained to the Commons Health Committee that the change in the arrangements so that CQC in essence has to refer concerns to Monitor, which then takes enforcement action, is devoid, as he put it, of conflict of interest when an inspector identifies a fault then later feels obliged to say that there is no longer a fault, simply to avoid the enforcement action appearing ineffective. However, that does not apply to the other sectors. It does not apply to social care provision, general practice or the independent sector. I do not understand why there is deemed to be a conflict of interest in relation to NHS foundation trusts and NHS trusts but not the other bodies. Nor does it apply to other sector regulators, such as the Health and Safety Executive or the Civil Aviation Authority. There are plenty of examples of regulators that monitor and also take the enforcement action.

I also do not understand why, when it comes to healthcare, the NHS has a different regulatory regime from that of the private sector. Surely, there ought to be consistency in approach. The noble Earl will know that we have had the fair playing field work undertaken by Monitor, as a result of discussions on the previous Bill. It does not seem that there is a fair playing field when it comes to regulatory machinery in relation to, say, the independent sector and to the NHS, even though they are both providing services under NHS contracts. I very much welcome Amendments 65, 66 and 67, tabled by my noble friend Lord Warner, and I would add to them my Amendment 66ZA, which would ensure that the NHS is dealt with equivalently.

On the NHSTDA and the NHS trusts, there is a puzzle regarding what appears from the architecture. I think it is generally accepted that those trusts which have not yet reached foundation trust status are generally considered to be the weaker organisations, given that NHS foundation trusts were introduced quite a number of years ago now. What is puzzling is that the weaker organisations seem to come under a weaker regulatory system. I will be interested to hear my noble friend Lord Warner’s remarks concerning his amendments, but it appears to be a puzzle and an inconsistent approach.

This also takes us back to the recommendations of Robert Francis concerning the merger of regulatory functions, which he suggested in his report that the Government should consider. On the fact that the Government have got themselves into such a tangle on the respective roles of CQC and Monitor, while I can well understand nervousness about having yet another restructuring in relation, for instance, to CQC—given the number of changes that have occurred to the care regulator over the years—I worry that they have come up with such a complex solution that I wonder whether merger might not come to be seen as the easier option.

I would also like to raise some issues about the process under which the failure regime takes place. I start with my Amendment 64A, in relation to the Section 29A warning notice under Clause 74(3). Can the noble Earl give some indication of how the significant improvement required is to be defined and assessed? Can he also say how proportionate CQC will be? Under proposed new Section 29A(2)(a) of the Health and Social Care Act 2008, which is introduced in Clause 74(3), a warning notice will state,

“that the Commission has formed the view that the quality of health care provided by the trust requires significant improvement”.

Is there not a need to clarify either in the Bill or in secondary legislation how “significant improvement” is to be defined and assessed and, specifically, how and where the warning notice applies given the number of multisite trusts offering a wide range of services?

In Clause 75, reference is made to Monitor’s imposition of licence conditions. What criteria will impact on Monitor’s decision to impose those licence conditions? Should they not be subject to statutory guidance, given the serious impact of their imposition? In view of the service implications for NHS trusts and NHS foundation trusts of CQC and Monitor interventions, ought there not to be a clear appeals process for providers, given the potential serious consequences for an individual trust or a local health economy of a warning notice or a “failure to comply” administration, both for the provider concerned and the other providers that may be affected by that decision?

My Amendment 66ZB deals with the multisite issue by requiring CQC to define how this is to be assessed. My Amendments 66ZD and 66ZE seek to have published the Monitor criteria under which a licence condition is issued following a warning notice. When such a warning notice is issued, a foundation trust should have the right to appeal under my Amendment 66ZC, which is consequential on Amendment 66ZE. The same principles apply to Clause 76 in relation to the regulator. CQC must surely publish criteria on following a transparent process in making judgments on trust special administration, where there also ought to be an appeals procedure.

It seems that there is a lot of work to be done to make sure that the health service and other providers fully understand the new regulatory apparatus that is to be brought into being. I remain concerned that there could be confusion between the two roles of Monitor and CQC and that the NHS Trust Development Authority’s role is rather mysterious. It is hard to understand why NHS trusts are not in fact subject to a much more robust process than other providers because, as far as I can see, apart from a number of community trusts which are likely to get foundation trust status, the intention is that we simply roll on for years to come with these unviable organisations. Money is clearly top-sliced in order to keep them going, and we know that the real issue is, in many cases, a failure to tackle reconfiguration. It is a worry that almost a limbo situation is being created in which no progress at all is going to be made. There is also a very clear need for due process as to how these licensing provisions are to operate and an appeal process for any organisation that is affected by them.

If the noble Earl, Lord Howe, would agree to the principle of that, I think he could look forward to general support within the health service and outside and, of course, public confidence. The overriding principle of making sure that quality and safety are considered at the same level, or even a higher level, than that of financial viability is one that we certainly support from these Benches. I beg to move.

18:30

[Lord Warner]

My Lords, I will speak to Amendments 65, 66 and 67 and to Clause 77 standing part. I share very much the concerns expressed by my noble friend Lord Hunt and I am not going to repeat what he said about the slightly strange situation that we are now in with the CQC having enforcement responsibilities in relation to some bodies that it registers but not in relation to others.

I want to concentrate on the missing part of this group of clauses, which is the Trust Development Authority, and go into a bit more detail on this area than my noble friend Lord Hunt had time to do. The purpose of these amendments is to try to pursue the question of whether there is parity of action required by the Trust Development Authority and Monitor, when the CQC issues a warning notice, irrespective of whether that notice applies to an NHS trust or an NHS foundation trust. There is something very curious about writing this quite complicated legislation, which, if I may say as a connoisseur of health and social security legislation, has the air of a rather rushed job. The builder was going to go off site quite quickly if we did not get the trimmings of the house finished—it has that feel to it.

The Bill is very focused on the enforcement action by Monitor, but is pretty much silent on what the TDA does. Like my noble friend Lord Hunt, this strikes me as extremely odd, because, as a general rule, the weaker trusts—I exempt my noble friend Lady Wall and her skilful chairmanship of her trust—are tucked away in the Trust Development Authority. You have to remember that they have all had the best part of 10 years to convince people that they could be given the autonomy of NHS foundation trust status.

I seem to recall that since its inception the TDA has not made a great deal of progress in getting over the hurdle trusts for which it has responsibility. My recollection, and the noble Earl will be able to correct me if I am wrong, is that there is only one trust in the past 18 months, Kingston, which has made it to FT status. There is hardly a queue of candidates in Monitor’s FT pipeline. Indeed, there is a real danger—if I may say so, slightly pessimistically—that the Trust Development Authority will struggle to live up to the middle word in its title.

What seems likely to happen, as we move forward into the next few years, is that as the money gets tighter we start to see increasing failure among some of the TDA trusts and a greater flow under this new legislation of warning notices from CQC. I have therefore become rather intrigued as to what should happen when the warning notices thud on to the desks of NHS trust boards and they fail to respond adequately.

Under this Bill, it is relatively clear, even with the reservations my noble friend Lord Hunt made, what happens with FT boards and Monitor. Far less clear, indeed totally unclear on the basis of the legislation, is what happens with TDA trusts, which after all account for about £30 billion a year of public sector expenditure, so there are quite a lot of patients going through their beds and doors.

In my search for further enlightenment, I have taken the trouble to read the document that the Trust Development Authority published last December with the rather upbeat title, Delivering High Quality Care for People, the accountability framework. This is a model of Department of Health speak—I am something of an expert on this, as is the Minister. It makes clear that trust boards will have to comply with some of the licence conditions set by Monitor, but it is rather uncertain which ones it will have to satisfy. It has set a lot of operational performance standards which look uncannily like the evil Labour targets imposed from time to time. It promises more details on the Trust Development Authority’s oversight model. I have yet to see very much of that further detail, but nowhere in this document is it clear what happens to these trusts that fail to live up to the expectations of that accountability document published about six months ago.

Continuing my search for enlightenment, I have moved on to read the May Department of Health document entitled, The Regulation and Oversight of NHS Trusts and NHS Foundation Trusts. It claims to throw light on the Bill’s quality of services clause. The first nine pages are pretty clear. We start to get into a bit of difficulty when we get to page 10, which is headed “Intervention”. That is when I became really puzzled. It says—I am not quoting, but this is pretty much what it says—that the TDA can request recovery plans, increase engagement with the trust, commission an independent and rather exciting thing called a deep dive, review the skills and competencies of the board and executives, and commission an interim report.

The noble Lord, Lord Hunt, and I are veterans of debating the regulations setting up the Trust Development Authority. Many of us thought it would be doing that anyway. We did not think this was some kind of new regime. This looks like a bit of a rehash of what it should have been doing in order to get the trusts for which it was responsible to pass the foundation trust tests set by Monitor. When it was set up, it was supposed to have that responsibility for quite a short period of time. It hardly looks like some new, sexy enforcement set of procedures which we would expect it to take when the CQC warning notices come to its attention. It looks as if the enforcement procedure for the trusts in the TDA remit is that they have to be given further chances. It is not explicit but—dare I suggest, as my noble friend Lord Hunt I think implied? —we could be heading back down the road of money being taken away from the successful trusts to buttress people in organisations who are not cutting the mustard in terms of the quality of services or the financial management that is required not only to be an effective foundation trust but to be an effective trust.

It is not at all clear to me how the Government are going to tackle the fact that the weaker brethren are within the responsibility of the Trust Development Authority but there is nothing in the Bill which actually says what the TDA will do. I am sure that the noble Earl will tell me about other bits of legislation, but it seems to me that if we want to convince the public that there is a new show in town for real enforcement when things continue to fail in a trust, whether it is an FT or an NHS trust, it would be sensible to put these provisions in the same Bill, particularly when we all know that the weaker trusts are under the TDA.

Paragraph 27 of the May document I mentioned is pretty elusive. Commissioners can have a go at reconfiguring if there is failure but that may not work. Eventually, the trust is unsustainable and becomes the responsibility of the TDA. Guess what the TDA can do? The TDA has absolute discretion as to whether it advises the Secretary of State. It can advise the Secretary of State to appoint a trust special administrator but is not required to. Under the current guidance, which only came out a month ago, the most the TDA is required to do is to consider doing that. If it chooses not to, it need not. We therefore have a situation in which the TDA seems to be operating under a different regime from Monitor. This is a really serious situation to be considered, and I suggest to the Minister that it will become a public confidence issue. I am not making a party political speech—this is all about getting legislation which is fit for purpose to restore public confidence after the Mid Staffordshire debacle.

Why does this Bill not provide for a much sharper set of actions from the TDA when the CQC issues a warning notice to a trust? The notice is a clear signal that the TDA’s efforts to rehabilitate the trust are simply not working. I suggest this with a bit of nervousness, but should the Government not consider withdrawing these clauses and provide a clear set of rules and requirements that protect patients effectively, whether or not they are in NHS trusts or FTs? I do not think that the Bill, as drafted, does the job of protecting patients. I do think that the TDA needs to be brought into this part of the Bill on a basis of parity and equivalence with the requirements that will be made of foundation trusts through the enforcement panels of Monitor.

[Baroness Wall of New Barnet]

My Lords, unlike my noble friend Lord Warner, I am not a connoisseur, other than about what happens in my trust. Maybe I can share our experiences in response to the questions on which my noble friend Lord Warner has been seeking clarification. I think it will answer some of them, although not all.

As many noble Lords will know, 18 months ago Barnet and Chase Farm Hospitals NHS Trust took the decision that it could not comply with Monitor’s requirements, primarily the financial aspects, and brought in Deloitte to do a complete survey of all our services. We met the benchmark for clinical services but, because of the historic debt, we did not meet the financial benchmarks. We went up to two for Monitor’s rating on finances, but it goes up to four, and so we were two—two and a bit—for one period. Although we sought support through the SHA at the time, from a body that offers trusts opportunities to apply for funding, we were unsuccessful. This is where I may not be able to assist my noble friend Lord Warner, because we decided ourselves, as a trust, that we would not be fit for purpose in that sense. There is a process, and people who have been involved in it much more than I have will know what that process is. We notified Monitor that we would not be able to do that.

18:45

Noble Lords should bear in mind that the whole driver in all this was the government decision that all trusts had to become foundation trusts by 2014. As a government decision, one respects that, but there were some views in our trust that we would have been able to do it had we had a longer period of time. I have been chairman of the trust for six years and take some responsibility. Although I thank my noble friend Lord Warner greatly for his comments about my custodianship —which I hope are all true—there was an ignorance, if you will, within my trust and maybe others. That process of going through to becoming an FT was not as urgent as it then became with the 2014 deadline, but we should have been making a much better aim for that. In my own trust, the financial position was very much based around us not drawing out cost improvements and always looking for growth.

However, obviously, growth came to an end. My noble friend Lord Warner was on a committee to which we made a presentation in a bid to get some financial support. He was extremely helpful in talking to me about why we would probably not get it, and I agreed with him totally. We decided, as a trust, that we could not make it through to become a foundation trust. There is a process, and we are at the stage of working with the Royal Free in the hope of achieving a partnership with it by April next year.

I think that my noble friend Lord Warner was perhaps a bit harsh in terms of what the TDA does. I do not disagree that maybe it should be in the Bill—I am sure that is right—but there is a contradiction in some of his arguments. First, absolutely correctly, my noble friend has said that the TDA was set up for a period, in order to see trusts through to 2014, as the Government required. For failing trusts, as my noble friend has emphasised totally and accurately, it was set up to effect some action that would move them out of operating. Again, I agree totally with my noble friend, in that the whole point of all this, and the whole worry for me as a trust chair, is that the services that patients receive are fundamental. If we, or any trust, are failing, particularly perhaps in service provision, but also in financial terms, that is major worry.

We have the advantage in my trust—if it is deemed to be one—in that we have gone through the reconfiguration ahead of and alongside the partnership. We have had a reconfiguration in place for more than 10 years. It has been put on hold by my Government and by the current Government, but we now understand that implementation will start to happen in November. We have had that perhaps unique experience of being in reconfiguration and going forward for foundation trust status, in a sense drawing those two things together. That is quite a challenge. We are hoping to be in partnership by April 2014 and are bringing about our reconfiguration from November 2013. Noble Lords can imagine the challenges which that brings to my trust, although we are complying, I think, with all the standards except in A&E, which is happening all over world.

My noble friend Lord Hunt and I refer to this all the time, saying, “How’s your trust doing?”. Therefore from our point of view the TDA has been quite clear —perhaps because we made it clear that we were unable to go forward in this. It exists but, according to its remit, only to ensure that by 2014 viable trusts will go forward to FT, and that something else will happen to non-viable, or failing trusts—the more emotive description. Those will either be brought under supervision, or will work in partnership with other trusts to achieve a different outcome. As regards supporting the amendment or otherwise, I am not sure whether the lifespan for TDA is so short that it will have any effect on delivering in the Bill, which has a longer-term view of what we are doing. However, I thought it would be helpful to give some perspective of what happens in the real world.

It is difficult and embarrassing to find yourself in this situation. However, for us the best outcome is that the partnership with the Royal Free works, and that the Royal Free has come to a decision that that partnership will be beneficial for it. Monitor will then get involved with the Royal Free to see whether that combined trust is still viable and whether it still meets all the requirements to ensure that compliance fits. Our patients are receiving good care and being looked after, and we still aim to be the best trust from which they can receive services and get good results. However, ultimately in our partnership with the Royal Free, patients will receive a better service.

I could not agree more with my noble friends Lord Hunt and Lord Warner that reconfiguration has to happen. We had brave words about it from the previous Government, but we did not do it. We now have brave words from the Secretary of State, who is doing a perfect job, from what I have seen—he is going out and seeing how it really works in a trust: rolling up your sleeves and making beds. My plea to the noble Earl is that the Government stick to the fact that reconfiguration has to happen. Politically, closing hospitals is dynamite. I have said that more times from these Benches and from the Benches opposite than I can remember. However, unless it happens, failing trusts will continue to fail. The financial aspects of failure are awful, but the performance of some of those trusts is not good enough for patients to be on the receiving end of it. I thought it would be helpful to share that. I am not sure whether I support the amendment, but I am sure I will come to a decision on that.

[Lord Warner]

My Lords, I clarify that I did not seek to attack the TDA. What my noble friend has said has made me more worried. What happens if these trusts do not make it to FT and people get fed up with the TDA and decide to try something different? We would still have these trusts, which would be providing services, still on the receiving end of CQCs, so why does the Bill not provide for some of these eventualities—which again, could happen in the real world?

[Lord Campbell-Savours]

My Lords, I will intervene only briefly, unlike yesterday when I went on at length on a couple of the amendments. My noble friend Lord Warner referred to the absence of a new force in town. I suspect that in some ways he is referring in part to the confusion referred to by my noble friend Lord Hunt. I will deal with paragraphs 60 and 61 of the Francis report, where two recommendations are made. Will the Minister, in his response to this debate, just tell us why the Government are refusing to implement those recommendations? I will not read those paragraphs in their entirety, but just the key points. The report states:

“The Secretary of State should consider transferring the functions of regulating governance of healthcare providers and the fitness of persons to be directors, governors or equivalent persons from Monitor to the Care Quality Commission. A merger of system regulatory functions between Monitor and the Care Quality Commission should be undertaken incrementally and after thorough planning”.

I would have thought that the Bill was the opportunity to do that. If that is the case, will the Minister tell us precisely what the objection is, and why we are not taking up that particular recommendation from the Francis report?

[Earl Howe]

My Lords, in addressing this complex and very important topic, I begin by thanking all noble Lords who have spoken in this debate, not least those who have introduced the amendments they have tabled. I welcome the opportunity to debate these clauses as they form a key part of our response to the issues raised by Robert Francis QC. They deal with difficult issues and I recognise the critical importance of getting this right. I particularly welcome the support of the noble Lord, Lord Hunt, for the principles, which I can assure him have governed the Government’s work in this area.

The intention of the changes we are making is to deliver a strong but flexible process for tackling quality failures to ensure that all NHS trusts adopt a rigorous approach to maintaining high quality care. I hope that noble Lords have had an opportunity to familiarise themselves with the document my department published, in collaboration with CQC, Monitor, the Trust Development Authority and NHS England, copies of which can be found in the Library. In my response to the amendments, it may help if I summarise the key elements of our proposals and why we feel that the approach we have taken is appropriate.

The Francis report made a strong case that the regulation of NHS trusts and foundation trusts needed to change so that greater emphasis is placed on addressing failures of quality. We agree. In future, roles within the regulatory system will be simpler and clearer. The Care Quality Commission will focus on assessing and reporting on quality, and Monitor and the NHS Trust Development Authority—the TDA—will be responsible for using their enforcement powers to address quality problems. To free up time to care, the overall regulatory burden on providers will be radically reduced. I remember that that concern was raised from the Benches opposite when I made a Statement to your Lordships on the Francis report. However, where there are failings in the quality of care, there will be a stronger response.

The CQC, through its new Chief Inspector of Hospitals, will become the authoritative voice on the quality of care provided. It will take the lead in developing a methodology for assessing the overall performance of organisations in meeting the needs of patients and the public. In doing so, the CQC will consult a range of bodies, including Monitor, the TDA and NHS England, to ensure that national organisations are working to a common definition of quality. The idea here is to arrive at, if I can put it this way, a single version of the truth: a single, national definition of quality that brings together information and intelligence from commissioners, regulators and local Healthwatch, as well as from the other bodies I mentioned. This new approach to assessment and inspection will form the basis of a new system of ratings to provide a fair, balanced and easy to understand assessment of how each provider is performing relative to its peers. It will also provide the basis for identifying where improvements are needed. We will, of course, debate the provisions on ratings later on.

The noble Lord, Lord Hunt, has tabled a number of amendments—Amendments 64A, 66ZB, 66ZD and 66ZF—relating to the consistency of CQC’s judgment. I understand the concern to ensure that there is transparency and consistency over how decisions to intervene are reached, but I am not sure that it can be defined through legislation. In part, it will be for the CQC, Monitor and the TDA to agree and set out in guidance—something, incidentally, they have all committed to doing. However, ultimately they must be matters of judgment rather than the tick-box mentality that allowed the failures uncovered in Mid Staffordshire to go unnoticed for so long.

19:00

What is important is that these judgments have credibility. That is why the CQC is overhauling its approach to undertaking inspections to ensure that those judgments will be based on expert opinion, led by the new Chief Inspector of Hospitals. The CQC has just appointed Professor Sir Mike Richards to become its first Chief Inspector of Hospitals. I am sure the Committee will agree with me that Professor Richards is an outstanding clinician who will command the full confidence and support of medical professionals.

I also agree completely with the noble Lord, Lord Warner, that the failure regime should be as robust for NHS trusts as it is for foundation trusts. That is absolutely our intention. However, as Monitor’s role is defined in primary legislation and the Trust Development Authority is a special health authority established under secondary legislation, we need to take a slightly different approach to achieve that common objective. I can tell the noble Lord, Lord Warner, that a similar failure regime already exists in respect of NHS trusts and it covers failures in quality. The Bill ensures a consistent regime for trusts and foundation trusts alike.

The Bill does not mention NHS trusts and the TDA because the latter is a special health authority established under secondary legislation. The NHS Trust Development Authority Directions 2013 delegate the Secretary of State’s extensive powers in relation to NHS trusts to the TDA. They include appointing directors and terminating their appointment, power to give directions to NHS trusts in relation to quality and recommending trust special administration. We have tried to place the regime on an absolutely equal footing with the regime that we are creating in the Bill for foundation trusts.

[Lord Warner]

My Lords, I am sorry to interrupt, but I have here a document that the noble Earl’s department sent out in May, signed up to by the TDA, Monitor and the CQC. I want to direct his attention to paragraph 27 of that document, which I mentioned in my remarks. As I understand it, this sets out the Government’s policy on the relative difference between TDA and Monitor. It makes it very clear. I shall quote from it, because this is absolutely the nub of the issue:

“Monitor can also place a foundation trust into special administration directly, following consultation with the Secretary of State and the CQC, on the grounds that it has, or is likely to become, financially unsustainable. The changes proposed in the Care Bill will enable it also to do this where it is apparent that a provider is clinically unsustainable”.

The initiative lies with Monitor. It can do this in relation to the trust of my noble friend Lord Hunt or to any other foundation trust when it has had a warning notice from the CQC and thinks change has not taken place. Hold that thought in the head and look at what the document says about NHS trusts that are in the maw of the TDA. It states:

“Managing the process of reconfiguring local services to provide sustainable, high quality healthcare that meets patient expectations and needs is primarily a role for local commissioners, supported by NHS England. In the event that an NHS trust or foundation trust has failed to make improvements and commissioner-led efforts to resolve the issue have not succeeded, special administration may, as a last resort, provide a mechanism for dealing with NHS trusts and foundation trusts which have become either clinically and/or financially unsustainable. Where the TDA considers it is in the interests of the health service, it can already advise the Secretary of State to place an NHS trust which it considers to be either clinically and/or financially unsustainable into special administration”.

Monitor can simply take that decision itself when it has the evidence. The TDA has to go through a series of hoops with commissioners before it can advise the Secretary of State. That is what this document seems to say. If it is wrong we need to be clear that it does not say what the Government mean it to say.

[Earl Howe]

I think the noble Lord has misled himself. The way in which we envisage the system working for both trusts and foundation trusts, where we have a provider that looks as though it might be clinically unsustainable, is to encourage commissioners and the provider concerned to come together and have a grown-up conversation about the configuration of services. That is the first resort and it is the normal course of action that we would expect, whether it is an NHS trust or an NHS foundation trust. In either case, trust special administration is going to be a last resort.

The noble Lord is right that, while we envisage the process of trust special administration to be broadly the same in both instances, there has to be a difference. The difference arises from the fact that foundation trusts are, in statute, much more autonomous bodies than NHS trusts. NHS trusts are still subject to directions from the Secretary of State. What the TDA does is act as the Secretary of State’s proxy in overseeing their quality, sustainability and governance. That is why there is a process around referral to the Secretary of State before a trust special administration can take place for an NHS trust, whereas that is not the case with a foundation trust. That is because Monitor is the independent regulator for FTs charged with doing that.

The noble Lord does not need to make too much of the differences that he has purported to identify in that document, which I will, of course, re-read in case we have inadvertently misled the Committee. The point I sought to make was that in no way do we envisage a material difference in the process which will ensue from a clinically unsustainable provider, or one whose quality is in question.

The noble Lord, Lord Warner, asked what will happen to NHS trusts that do not meet expectations of the accountability framework published last December. The accountability framework covers clinical and operational metrics, governance, leadership and finance. If the TDA judges that a trust is failing the accountability framework, it has a number of options. It can request recovery plans—Monitor is also in a position to do that with FTs; it will increase the frequency of its engagement with the trust; it can commission an independent investigation; it can review the skills and competence of board members. Again that is something that Monitor can do with FTs. It can commission interim support to provide additional management capacity—again that is something that in theory Monitor could do under its licensing arrangements. Ultimately, the TDA can exercise the Secretary of State’s functions and terminate appointments. Monitor has similar powers. I want to reassure the noble Lord, Lord Warner, that there is not such a gap as he has made out in this area.

Incidentally, the noble Lord called into question the speed of progress of the foundation trust pipeline. I can assure him that the pipeline is moving. It may look rather glacial from his perspective, and I can understand why. However, even though the TDA was established only on 1 April, two foundation trusts have been authorised since then—Kingston on 1 May and Western Sussex, which was announced today.

The noble Lord, Lord Warner, sounded a warning that this kind of arrangement posed a risk that money could end up being taken away from successful trusts to bolster poorer performers. It is precisely to avoid that that we need to grasp the nettle in some cases as we had to do in south London to ensure that one part of the NHS did not drain the resources that should be shared out more equitably among the rest of the health service. Certainly, this is not the intention of our policy. In fact, the purpose of special administration, if it is deemed necessary, is to ensure both clinical and financial sustainability. When it is clear that a hospital cannot resolve quality failures in its current form, we will no longer have to wait until a trust fails financially before action is taken. That is why I shall talk about special administration in more detail in a second.

In future, issuing a warning notice to a trust or foundation trust will be a sign that there is a serious quality issue at that trust and that significant improvements are required. I fully agree with the noble Lord, Lord Hunt, that it will be important to determine what significant improvements could encompass, as proposed by Amendment 64A. We have been clear that the new warning notices are designed to highlight serious failings, such as a systematic failure to meet fundamental standards. As noble Lords will remember, the fundamental standards are a concept that Robert Francis put forward, whereby treatment or practices in a trust could be said to be absolutely unacceptable by anyone’s measure. The fundamental standards themselves have not yet been defined; that process will be taken forward in the coming months with full consultation with the public, and we need to get that right. That is the issue underlying the provision around significant improvements. Under the 2008 Act, the CQC is already required to publish guidance to detail its approach to issuing warning notices. This will be revised in light of this Bill to include its interpretation of “significant improvement”. That is a flexible and proportionate approach.

When a trust receives a warning notice, just as happens now, it will be published and the CQC will send a copy either to the TDA or to Monitor, depending upon whether they relate to an NHS trust or foundation trust, as proposed by Amendment 65. Clause 74 amends Section 39 of the 2008 Act, which requires that a copy of the notice be sent to Monitor and any other persons whom the CQC considers appropriate. When the notice relates to an NHS trust, this would include the TDA.

I have listened carefully to the noble Lord’s arguments in favour of Amendment 66ZB regarding large providers spread over many sites. This is not a new issue; having a regulatory system that is flexible enough to cope with such organisations has always been critical. At present, the CQC has to ensure that they can take a differentiated approach and can deal appropriately with providers, ranging from large multisite hospital trusts to care homes. This will continue to be the case, so I feel that this amendment, while I sympathise with its intent, is unnecessary.

Clause 75 introduces changes to ensure that when failures are identified, there is a prompt and firm response. We have been clear that when a provider receives a warning notice, the responsibility to resolve problems will remain with the provider in conjunction with the local commissioners, as I referred to earlier. However, serious failures in the quality of care must not be allowed to be endure, so Clause 75 makes changes to ensure that, when quality of care at a foundation trust requires significant improvement, Monitor can take timely action to make changes to leadership or governance to secure improvements in those services. It amends Monitor’s powers under Section 111 of the 2012 Act to enable it to impose additional licence conditions on foundation trusts when the Care Quality Commission has issued a warning notice to that trust. At present, Monitor can make use of these powers only if there is a failure in governance. If the foundation trust breaches those additional licence conditions, Monitor will be able to use its powers to suspend or remove directors or governors. The NHS Trust Development Authority already has powers to intervene in NHS trusts or to remove or suspend boards, as appropriate.

19:15

I see where the noble Lord is coming from with Amendment 66ZD, which proposes that Monitor must set out the criteria that guided its issuing of additional licence conditions, but I wonder whether it is wholly necessary, given that the main criteria will always be, as the legislation sets out, that the CQC has previously issued a warning notice, which will provide further details on the nature of the failure and the necessary improvements required. I do not believe that the amendment would add anything substantive to this, although, of course, I am happy to discuss this further with the noble Lord, if he would like that.

The noble Baroness, Lady Wall, in her powerful speech, which brought us to the realities of life in a very vivid way, as the noble Lord, Lord Warner, said, sounded a very appropriate warning about the need to grasp the nettle with regard to reconfigurations. The noble Lord, Lord Hunt, expressed his worry that, taken as a whole, the Government’s approach was a recipe for limbo as regards progress towards the necessary reconfigurations. I do not agree with that. We have been very clear, not least since the debates on the Health and Social Care Bill last year, that those issues, when they arise, should not be ducked.

In the first instance, as I have explained, reconfigurations can typically take place through discussion between commissioners and providers, and many have. Stroke services in London are a classic example of a fantastic series of reconfigurations that took place completely in the public eye and have been outstandingly successful. However, in some cases it may be clear that more fundamental issues prevent an NHS trust or foundation trust from making the necessary improvements in its current form. There may be a series of factors that, despite the best efforts of the board of a trust, are inescapable. In such cases, Clause 76 enables Monitor to make an order to authorise the appointment of a trust special administrator on quality grounds, and for the CQC to prompt it to do so if necessary.

The noble Lord makes a number of fine points on Amendment 65ZF, and I agree that the process of special administration should always be evidence-based and transparent. This will be achieved through a number of provisions, as I will set out. First, before the CQC or Monitor could put a trust into special administration on quality grounds, it would need to be satisfied both that there has been a serious failure in the quality of care and that special administration is appropriate. If the CQC or Monitor is satisfied that these requirements are fulfilled, it must consult the Secretary of State and its fellow regulator before then consulting the trust in question, the board, and local commissioners before an order is made. Those are safeguards. They are not designed to hold up the process of a special administration where it seems to be in the best interest, but they are, I think, appropriate safeguards when such a radical step is being considered. Section 65D of the National Health Service Act 2006 already requires Monitor to publish its reasons for making the order in a report laid before Parliament. I hope the noble Lord agrees that, given this, the amendment is not required.

For NHS trusts, the TDA has a duty under secondary legislation to advise the Secretary of State if it thinks that it would be in the interests of the health service for him to put an NHS trust into administration. We therefore propose to amend the TDA directions to oblige the TDA to make such a recommendation where advised to do so by the CQC. I hope that the noble Lord, Lord Warner, will see that that is perhaps one of the missing links that he was looking for. We would expect the CQC to consider doing so where an NHS trust had failed to comply with a warning notice, as proposed by Amendment 66, in the same way in which it must for a foundation trust. If necessary, the Secretary of State could exercise his powers under Section 4(2) of the Health and Social Care Act 2008 to direct that the CQC must have regard to this aspect of government policy.

For foundation trusts, the objective of trust special administration is currently focused on continuity of services and financial stability. Clause 77 is therefore needed to ensure that there is necessary focus on the quality of services. To achieve this, Clause 77 broadens the objective of trust special administration as it applies to foundation trusts to include an additional requirement for services to be of sufficient safety and quality. The objective will apply to any foundation trust in special administration, regardless of whether the order was made to resolve a financial failure or a serious failure to provide services of sufficient quality. The intention is to ensure that the CQC is satisfied that the services that continue are not only financially viable but clinically sustainable.

Clause 77 also requires that the CQC is consulted before the trust special administrator provides a draft report to Monitor recommending the action to be taken by Monitor in relation to the trust. The administrator may not provide a draft report to Monitor unless he or she has first obtained a statement from the CQC that the part of the objective relating to the quality of the services has been met. When considering the final report from the trust special administrator, the Secretary of State must also be satisfied that the CQC has fulfilled these functions. So there is, if you like, a “triple lock” here for the quality of services.

In contrast, in reference to Amendment 67, special administration can be triggered for NHS trusts where it is in the interests of the health service to do so. That is a far broader definition that already focuses on securing quality services. In relation to NHS trusts, we envisage a similar role for the CQC in providing a statement about the quality of services to an administrator that considers the recommendations made in the draft report. This will not require primary legislation. Instead, it will be set out in guidance.

There are a further series of issues that I am sure noble Lords want me to cover. I apologise for the length of my remarks, but this is a very large group of amendments.

I appreciate the concern that there should be clarity throughout the system for providers as to why action is being taken against them and where they stand. However, we need to balance that with the need to act promptly, when necessary, to protect patients. I think we have got that balance right in the clauses as they stand.

Under current legislation—and I am afraid that duty requires me to remind the House that it was enacted by the Opposition when they were last in government—no provider has a right of appeal to the First-tier Tribunal where the CQC issues a warning notice. I see no reason why the situation should be different in the future for NHS trusts and foundation trusts, as proposed by Amendment 66ZC.

Neither is there currently any right of appeal against the imposition of licence conditions under Section 111 of the 2012 Act, as proposed by Amendment 66ZE, just as there is none when the Secretary of State determines it appropriate to intervene to rectify concerns at an NHS trust. Again, this is consistent with the position established by the Opposition when they were in government. To establish one now would be to create an unhelpful discrepancy between the way in which Monitor’s powers under Section 111 would apply to quality issues and the way in which they already apply to failures of governance.

Amendment 66ZG proposes that there should be a right of appeal where there is disagreement as to whether the order should be made. We have included the power for the CQC to ensure that the chief inspector, as the guardian of quality in the system, can direct Monitor to put a foundation trust into administration if he considers it necessary in order to protect patient safety. To allow a right of appeal in that instance would be to cast doubt on the chief inspector’s judgment at what could be a most crucial juncture, if one were to imagine another situation like that of Mid Staffordshire. While I understand noble Lords’ concerns, I think that the approach that we have taken is the right one when one considers that, in the future, such action will be based on expert judgments and reserved for the most serious failures where the priority should be securing safe and sustainable services for local patients as quickly as possible.

I will address the questions posed to me. The noble Lords, Lord Campbell-Savours and Lord Hunt, asked why the Government had not simply accepted the recommendation of Robert Francis to merge Monitor with the Care Quality Commission. We were explicit at the outset that this was one recommendation that we were not going to accept, because we firmly believe that there remains a strong case for maintaining the CQC and Monitor as separate organisations that fulfil distinctly different functions. The inspection and assessment of quality of care should not be conflated with the responsibility for turning around failing providers.

We agree with Robert Francis that we need to tackle duplication and misalignment, and we will achieve this through the single failure regime. The single failure regime will provide a clearer understanding of roles between organisations, with the CQC responsible for exposing problems and Monitor and the NHS Trust Development Authority responsible for overseeing enforcement action. We have received much support for our proposed approach. For example, the Nuffield Trust,

“recommended against transferring Monitor’s responsibilities to the CQC”,

and the Royal College of Nursing supported,

“moves that will allow for the NHS Trust ‘failure regime’ to be enacted on the basis of failures of quality, instigated by the CQC”.

There is a difference of view between us and Robert Francis. We feel that we have met the spirit of his recommendations in other ways.

The noble Lord, Lord Hunt, pointed to an apparent difference of treatment between NHS trusts and foundation trusts on the one hand and private providers on the other. The CQC’s current powers simply have not been as effective in NHS hospitals as they have been in other sectors. I would go so far as to say that the nuclear option which the CQC currently has of closing down a hospital simply is not credible when one considers that many hospitals are the only show in town in providing services. The CQC has never exercised that power in relation to an NHS trust. It has exercised it in relation to a care home, but I believe noble Lords will readily see that a care home is a rather different animal from an acute hospital, not least because it operates in a market where very often there are alternative sources of provision. That is why we have reshaped these provisions. It is vital that effective and timely action can be taken where quality is found to be lacking in our hospitals, and that the regulators have a range of powers available to them according to the severity of the issue.

19:30

Monitor and the CQC are subject to enhanced duties of co-operation in the 2012 Act. The bodies have also committed to closer working, and these clauses have been developed jointly with them. As I said, the CQC has appointed Mike Richards as the first Chief Inspector of Hospitals, and he will be the authoritative voice of quality. These things have happened since Robert Francis looked at the whole issue. The way in which the CQC and Monitor now work together is a direct product of the events of Mid Staffordshire, even before Robert Francis was appointed to his second inquiry.

Government Amendments 66A, 67A and 68 to 72, in my name, are minor and technical amendments to Clauses 76 and 77, and are necessary to ensure that the requirements which the Bill introduces to consult the CQC in the preparation of the administrator’s draft report under Section 65F of the National Health Service Act 2006 and when preparing guidance for trust special administrators under Section 65N of that Act will apply correctly until such time as all NHS trusts have been abolished and paragraphs 15 and 24 of Schedule 14 to the Health and Social Care Act 2012 take effect.

I hope that noble Lords are content with my assessment of the failure regime in the light of the amendments tabled and that I have been able to provide reassurance that the approach that we have taken is correct. As I said, these clauses are a direct response to the report of the public inquiry led by Robert Francis, which sets out how regulators, commissioners, professional bodies and the Department of Health failed to secure high-quality care. The single failure regime will ensure that when quality is found to be lacking, a prompt and robust approach will be taken.

[Lord Hunt of Kings Heath]

My Lords, I will not detain the Committee other than to say that the noble Earl’s response bears careful reading. I am still confused about the role of the CQC. If it is able to enforce action against non-NHS social care providers, I do not understand why it is unable to enforce action against NHS providers. I hear what the noble Earl says about the better working relationship between Monitor and the CQC and I am sure that is right. I pay tribute to the new leadership of the CQC and to the appointment of Sir Mike Richards. However, I believe that the architecture still allows for confusion. I would like further clarification on when Monitor and the CQC can take a different view on quality issues. Perhaps we will come back to this on Report. I cannot believe that Monitor will simply accept the CQC’s judgment at face value. Surely its board will have to come to its own view on those issues. That is an area I would like to explore further.

The noble Earl was reassuring about the issue of non-foundation trusts raised by my noble friend Lord Warner. None the less, it does not feel quite like that on the ground. It does not feel as though immediate action is being taken with the many trusts that are clearly nowhere near achieving foundation trust status. I may encourage my noble friend to come back to that point. Having said that, I am grateful to the noble Earl for his comments, and I beg leave to withdraw the amendment.

Amendment 64A withdrawn.

Amendments 65 to 66ZC not moved.

Clause 74 agreed.

Clause 75 : Imposition of licence conditions on NHS foundation trusts

Amendments 66ZD and 66ZE not moved.

Clause 75 agreed.

Clause 76 : Trust special administration: appointment of administrator

Amendments 66ZF and 66ZG not moved.

Amendment 66A

Moved by

[Earl Howe]

66A: Clause 76, page 63, line 37, leave out “regulator” and insert “Secretary of State”

Amendment 66A agreed.

Amendment 67 not moved.

Amendment 67A

Moved by

[Earl Howe]

67A: Clause 76, page 63, line 38, at end insert—
“( ) In subsection (4) of that section, for “the reference in subsection (1) to the Secretary of State is to be read as a reference” substitute “the references in subsections (1) and (3A) to the Secretary of State are to be read as references”.
( ) In paragraph 24 of Schedule 14 to the Health and Social Care Act 2012 (abolition of NHS trusts in England: consequential amendments to section 65N of the National Health Service Act 2006), after sub-paragraph (2) insert—
“(2A) In subsection (3A), for “the Secretary of State” substitute “the regulator”.””

Amendment 67A agreed.

Clause 76, as amended, agreed.

Clause 77 : Trust special administration: objective, consultation and reports

Amendments 68 to 72

Moved by

[Earl Howe]

68: Clause 77, page 64, line 8, leave out “(2A)” and insert “(5)”

69: Clause 77, page 64, line 11, leave out “(2AA) Nor” and insert “(5A) Nor, in the case of an NHS foundation trust,”

70: Clause 77, page 64, line 16, leave out “(2B)” and insert “(6)”

71: Clause 77, page 64, line 18, leave out “(2A) or (2AA)” and insert “(5) or (5A)”

72: Clause 77, page 65, line 10, at end insert—
“( ) In paragraph 15(4) of Schedule 14 to the Health and Social Care Act 2012 (abolition of NHS trusts in England: consequential amendments to section 65F of the National Health Service Act 2006)—
(a) in the new subsection (2A) to be inserted by paragraph 15(4), in paragraph (a), for “65DA” substitute “65DA(1)(a)”,(b) after that new subsection, insert—“(2AA) Nor may the administrator provide the draft report to the regulator under subsection (1) without having obtained from the Care Quality Commission a statement that it considers that the recommendation in the draft report would achieve that part of the objective set out in section 65DA(1)(aa).”, and
(c) in the new subsection (2B) to be inserted by paragraph 15(4)—(i) after “Where the Board” insert “or the Care Quality Commission”,(ii) for “to that effect” substitute “to the effect mentioned in subsection (2A) or (2AA)”, and(iii) after “, the Board” insert “or (as the case may be) the Commission”.”

Amendments 68 to 72 agreed.

Clause 77, as amended, agreed.

Clause 78 agreed.

House resumed. Committee to begin again not before 8.37 pm.

Business and Society

Wednesday 12th June 2013 Lords Chamber

Question for Short Debate

19:37

Asked by

[Lord Sacks]

To ask Her Majesty’s Government what is their assessment of the relationship between business and society.

[Lord Sacks]

My Lords, I am grateful for this opportunity to discuss the relationship between business and society. I welcome in particular the opportunity short debates such as this provide to step back from the specifics of policy to take a wider and longer view of the moral dimensions of economic policy. This is a very large subject indeed, and I will hazard just a few words about it in general and then turn to one aspect, confident that other speakers will touch on others.

In the light of the G8 protests and so much else that has been said in recent years, it is often assumed that when a religious leader speaks about business, it is to be critical of capitalism and all its works. That is not the case in the tradition from which I speak. The Hebrew Bible, after all, records perhaps the world’s first economist, Joseph, who invented the theory of trade cycles, seven years of plenty followed by seven lean years, which has thus far proved to be a more accurate guide to the 21st century than most other economic forecasts.

We believe that business and the market economy generally play a moral role in society. Business is the greatest stimulus we know to human creativity and increases the common wealth. It reduces poverty, and poverty is profoundly humiliating. Economic liberty has a deep association with political liberty. Trade, as Montesquieu pointed out in the 18th century, is a deep alternative to war. Throughout history, trading centres, such as the city of London, have been at the forefront of tolerance and respect for difference. However, economics is always subject to an overarching moral law. According to the Talmud, the first question we are asked in heaven is: were we honest in business? It does not say what happens if the answer is no, but in my mind’s eye I see an angelic figure like the noble Lord, Lord Sugar, with wings, saying, “You’re fired”.

However, I wish to express my concern at one specific aspect of our current situation, namely youth unemployment. Today, unemployment is high throughout Europe, and youth unemployment far higher still. In Britain, the current figure is 20.7%. This is by no means the worst. In Greece, the figure is 58%, in Spain, 55%, in Italy, 37%, and in France, 25%. These are all disturbing figures. The real question hovering in the background is: is this a mere temporary feature of a low point in the economic cycle or is it likely to become a permanent feature of economies in the West, as virtually everything to do with business becomes increasingly globalised as we continue to outsource manufacturing and service industries to low-wage economies elsewhere in the world?

It used to be thought that high unemployment was the price we paid for low interest and inflation rates. Is it now to be the price we pay for global free trade? Are we condemning a significant proportion of young people to a future in which they will never find work? If so, the price we pay is likely to be very high indeed. There is the economic danger of an increasingly small working population supporting an ever larger non-working population, something that is already happening because we are living so much longer. There is a political danger. Historically, and in many parts of the world today, youth unemployment is a prime cause of political instability. Above all, however, we should be mindful of the moral, psychological and—dare I say it?—spiritual hazards at stake.

In Judaism, we believe that work is fundamental to human dignity. We believe that everyone should be able to say, “I made a contribution to the common good. I gave; I did not just receive. I earned my daily bread. I did not depend on the generosity of others”. Our ancient sages said, “Do even the most menial work rather than be dependent on others”. Maimonides, our most eminent medieval scholar, held that the highest form of charity was job creation because it enabled the recipient to become independent of charity. These remain compelling ideas.

A Jewish economist, David Ricardo, formulated one of the most morally beautiful of all economic theories, the law of comparative advantage, which states that even if you are better than me at everything, if you are still better at some things than others, and I am also better at some things than others, then if we both concentrate on what we are best at, and trade, we are both better off. That means that every one of us has a contribution to make to the common wealth. We all have something to give.

In a very moving article a few months ago, the columnist Matthew Parris wrote about the experience of life on welfare benefit that he had once undertaken for a television documentary. He discovered that the real issue was not so much material as psychological. Without minimising the deep financial hardship, he wrote that,

“what I'll never forget was the slow, quiet, killing quality of a life without purpose, a life where you depend, but nobody depends on you; a life where all the people around you, too, are without occupation”.

He spoke of the “shame” and “indignity” of worklessness. That is precisely what drives Jewish economic ethics.

There is an inescapable moral dimension to economic policy because it is, in the end, not about abstractions, such as GDP, but about people. There could be no more dispiriting prospect than the thought that a significant proportion of young people in this country will grow up without prospect of employment, without contributing to the nation’s economy and without having the chance to say, “I made this, I contributed, I helped this to happen”.

I therefore ask the Government to explain how they are exploring ways in which business, education, local and regional groups and civic and voluntary organisations can work together to increase the skills of and job opportunities for young people. Employment is a moral issue because dignity comes from what we do to enhance the lives of others.

19:44

[Lord Patten]

My Lords, I shall make three points about where business and society meet from an ethical point of view. First, there is surely no iron curtain between business and society because, after all, the shared values of business people and people in society are the same. They try to help and look after each other, doing good not bad, being supportive and helping people in ways that they can. That is at least the best reading of that shared value. Equally, most businesspeople such as my wife and me go back at the end of our business day into society. We are not some other class. Most people in business look to society as a haven and a home, just as most people in society look to business to supply their needs. There is no iron curtain of any sort there.

Secondly, all of us should be extremely cautious when things go wrong in business, such as giving in to the sound bite delights of, say, bad banks and the rest, because I fear that that will discourage a lot of those who are not bad but good bankers. There are a great many of them, and that is why I very much welcome what the noble Lord, Lord Sacks, said about the ethics that drive his religion. They are sometimes very different from those that drive mine but, with due respect to some of the cassock-wearing classes—I entirely exonerate the right reverend Prelate the Bishop of Chester—there has sometimes been a bit too much bad bankery around, which distresses a lot of people. One has to be careful, moderate and modest in what one says.

Thirdly and lastly, society has a lot to learn from business and big business. I recently looked at the ethical code of an extremely successful global corporation, which has got away without having any ethical problems in the past two or three decades because of the high levels of ethical training that everyone in that business has to go through. They have to sign up each year to a final question: “Would I be pleased where conscience meets ambition? Would I be pleased to see what I am going to do today in the media tomorrow to be seen by my loved ones?”.

19:47

[Lord Glasman]

My Lords, it is always an honour to participate in a debate introduced by the noble Lord, Lord Sacks, the Chief Rabbi, who has led my community, the Jewish community, in an exemplary way. He has renewed our most important tradition, modern orthodoxy, and made it relevant for the modern world. As ever, he has it completely right by bringing our attention to the relationship between business and society. There has been a rupture in that relationship, and it is extremely important to reconceptualise it.

I want to concentrate on the issue that the noble Lord brought up regarding youth unemployment and the way that faith can cast light on it. He has a unique voice, but he is not alone in what he said. Two weeks ago, I was invited to Rome, where I received a medal from the Vatican. One must understand that, as someone who grew up in Jewish north London, receiving medals was not something that I ever expected to happen. They would normally have been for sporting or military activities, neither of which, according to the comparative division of labour, was a speciality of Palmers Green and Southgate Synagogue.

However, the Pope also has a very pro-business and pro-worker agenda. Issues regarding usury and interest rates are extremely important to that. Above all, what faith brings, and what we neglect, is the realisation that there is no solution to youth unemployment without bringing older people into the equation. There needs to be intergenerational solidarity. Traditionally, we have always put a strong emphasis on our elders. It is essential that we retrieve the idea of vocation and bring in older people, who should not be abandoned and whose wisdom and experience are so important in generating the values that will be essential to earning a living in the world and generating employment. We need to find ways to allow older people to relate to younger people, who should hear their stories and learn their skills. I commend the Chief Rabbi for this debate.

19:50

[Baroness Scott of Needham Market]

My Lords, perhaps oddly in a debate on business, I am going to focus on the topic of volunteering. I am going to do so because the good news is that more and more people of working age are volunteering, but they are able to do so through the good offices of the businesses and people who employ them and give them time off to do so. Many organisations are going further than this, and are participating in bespoke schemes which enable their staff at all levels to become involved with volunteering. This is perhaps with chosen charities through team activities, fundraising or joining in the work of the charity, or in other cases, giving professional advice such as legal, IT or financial.

The Westminster volunteer centre has a very good track record of working with large organisations and corporations to enable this to happen. I recently met a lady called Nikki King. She is the managing director of Isuzu trucks, and she decided to tackle the lack of aspiration that she sees so often in young people by giving them mentors from the world of business and industry. She started just doing this by herself, but she now works with the Freight Transport Association, DHL, Asda, William Hill and many others to provide mentoring to 14 to 18 year-olds. In my own area, AXA insurance and Willis have both worked with local volunteer organisations.

Academic studies from around the world have shown that creating an employer supported volunteering scheme is a cost-efficient way for business to increase staff job satisfaction, build internal and external networks, contribute to high-quality personnel recruitment, teach new skills to their employees, improve customer relationships and increase shareholder value.

What do we, as parliamentarians, need to do to encourage this trend? First, we need to keep our house in order. I think that it is rather a pity that, as one of the largest employers in Westminster, we do not have a corporate volunteering scheme here. I have raised this with the House, and perhaps other noble Lords will support me in this endeavour.

Secondly, the Civil Service has a very good track record of volunteering and I hope that the Government will remain committed to it. Finally, the Government need to take a look at the funding for volunteer centres. Volunteering does not come free; there is no substitute for the face-to-face expertise and bespoke service provided by good volunteer centres.

19:51

[Lord Mawson]

My Lords, when I began my work as a social entrepreneur in the East End of London 30 years ago, there was a clear perception that the public sector and charities were the good guys who do good to people and that business was for, and I quote, “greedy capitalist pigs”. Of course, many of us at that time had little, if any, real practical experience of working with business people. However, we read the Guardian and completed our university degrees and so we were experts.

As a clergyman, I am in the religion business, and the religion at that time was very clear and of a fundamentalist nature. Religion had moved out of the churches and on to the street, and its belief systems were firmly established in the public and charitable sectors. Over the past three decades, our understanding has changed. We have been led through the Common Purpose programmes of the 1990s into practical working relationships with the business community. We have come to know and respect many business people because they often know how to run things well. Many of us have formed business partnerships to deliver our programmes in local communities.

Today only 6% of the funding at the Bromley by Bow Centre, which I founded, comes through the state. The majority of our success stories are because we work in partnership with business. This week a £1.5 billion development programme has been announced in Silvertown Quays in the Royal Docks. With a good wind behind it, this programme could change the lives of one of the poorest communities in east London. I was invited to join the team and I am proud to be a member of this business consortium which I hope will transform this piece of London over the next decade and create hundreds of jobs. Here, of course, I must declare my two interests.

What does the future look like? I think we need to use the present financial crisis to create a new alignment. The state needs to create the conditions within which the business, social enterprise, and charitable sectors can work together. As a practitioner, I have to grapple every day with the insensitive bureaucracies and silos of government systems, and it is not getting any easier despite years of rhetoric from Ministers of every political persuasion. The real moral challenge to all our parties is not with business per se but with the state and its seeming inability to deliver at ground level.

We must have a more intelligent discussion about the size of these state institutions and how we enable each of them to work more easily with small and medium-sized enterprises. This is the real moral issue: size matters.

19:54

[The Lord Bishop of Chester]

My Lords, I want to risk the wrath of the noble Lord, Lord Patten, by suggesting that society as a whole would be better off if more businesses and organisations were to pay the living wage. The aim is to pay enough to sustain a basic but adequate standard of living. The current rates, as determined by the Living Wage Foundation, are £8.55 an hour in London and £7.45 an hour elsewhere.

Over the past 30 or so years, there has been a general move towards more liberalised markets. Whether this is a move back to the Hebrew Bible or not we can perhaps discuss at greater length, but no doubt it is. It has produced many benefits, but the problem is that any society based upon freedom tends to produce more winners and losers and exaggerates the differences, and indeed, an underclass very easily emerges.

While low pay is a feature of most advanced economies, the UK has a particularly high, and rising, share of low-paid workers. If we use the living wage as a guide, in 2011 nearly 5 million UK employees were paid less than the living wage. This included 25% of all female employees, and 41% of all part-time employees.

I travel regularly in Scandinavia for family reasons, and the benefits of having a minimum in excess of our living wage in relation to dignity at work as well as the wider and broader features of society, are pretty obvious to me. Surveys in the UK suggest that paying the living wage has led to improved productivity by reducing the staff turnover, and raising morale.

I remember all the predictions of economic damage when the minimum wage was introduced in this country. They were mistaken. Is it not time for businesses across the UK—and for that matter, the Government—to work towards a greater implementation of the living wage? Church bodies are resolved to do this as they are able to, and I am glad to say that real progress is being made. Very recently the Church Commissioners, with their extensive property holdings in London, have agreed to pay the living wage to all employees, including cleaners and everyone else.

In this spirit, I ask the Minister whether all those who work in these buildings, including contract workers, are themselves paid at least the London living wage. If not, why not?

19:56

[Baroness Bottomley of Nettlestone]

My Lords, I warmly congratulate the noble Lord on introducing this debate. I became a Conservative when working for the Child Poverty Action Group, influenced by a distinguished Jewish politician who had a profound influence on Margaret Thatcher, the late Lord Keith Joseph. I had written a wonderful paper about family benefit, or child benefit, and how critical it was. He read my paper when I was aged 23 or 24, and he said, “Virginia, you only have to understand one thing; it is much easier to divide the cake up than it is to bake it in the first place”.

Wealth creation matters. If we want schools, hospitals, roads and infrastructure, and if we want to do good and change the world, wealth creation is a critical element. I am pleased that the recent UN millennium development goals particularly emphasise the need for a much greater role for business in any new global framework. Only recently the Economist—of which I am a trustee—wrote an article about the number of people coming out of poverty. They are coming out of poverty because of wealth creation.

Of course there have been examples of the unacceptable face of capitalism, but there has been much more of a profound move to corporate social responsibility, of which one of the greatest champions and pioneers has been the Prince of Wales. His work with the Prince’s Trust, Business in the Community and International Business Leaders Forum has all been about recreating the principles that I suppose surrounded the 19th century businesses of the Cadburys and many others, of serving your community. By serving and strengthening your community you also strengthen your business at the same time.

Business now also informs much of the philanthropic sector and the noble Lord, Lord Mawson, was beginning to touch on this. I am fascinated by the work of social impact bonds, Big Society Capital, social incubators and social enterprises. We used to have different rules of engagement for the philanthropic side than for the commercial side. Now there are far more people saying, “No, philanthropic organisations should use their money wisely and well”.

The gap has been universities. Universities are a catalyst between business and society. With great pride, I am chancellor of the University of Hull—which is an area of high unemployment. The university makes a profound difference working with industry and enterprise to create the conditions where external business wants to invest and wants to create employment. A recent example is the Humber port project, leading to the investment of Siemens, and there are many other examples where the local workforce is being trained to be fit for purpose and global businesses are being encouraged to invest in a needy but thrilling part of the country—Kingston upon Hull.

19:59

[Baroness Warwick of Undercliffe]

My Lords, I was prompted to speak by a meeting with the impressive Ethical Trading Initiative, an alliance of companies, trade unions and voluntary organisations, which sets out principles on which international trade should be founded and to which companies and their supply chains have signed up.

Businesses alone cannot take the blame for the pressure for cheap-as-chips products. We, as consumers, are helping to drive their business decisions, yet when a disaster occurs, such as the collapse of the garment factory in Dhaka, we are outraged at the loss of life and the conditions of the garment workers. An event such as that makes the ETI principles all the more valid and emphasises the need for them to be underpinned by the UN guiding principles. Therefore, I ask the Minister: when will the Government publish their strategy for implementing the UN principles?

Sound corporate governance is integral to sustainable economic growth and to the delivery of a better society. It helps us to discharge our duty to the disadvantaged, such as the clothing workers in Bangladesh. That is why I hope that the current review of non-financial reporting requirements will produce strengthened social, environmental and human rights commitments.

I also welcome the proposed amendment to the EU accounting directive, which would require companies to account for their impact on society more generally. Can the Minister confirm that the Government will support that amendment?

Finally, closer to home is the CAF/NCVO Back Britain’s Charities campaign, launched in response to a 20% drop in donations when charities face a 67% increase in demand for their services. Businesses are as much a part of their local communities as local government or charities. They have a significant role to play in addressing difficult social issues. Next week, the CAF/all-party parliamentary inquiry on growing giving, chaired by the right honourable David Blunkett MP, starts taking evidence. Can the Minister tell us the Government’s views about encouraging both employers and employees to work together to give more time and money to good causes?

20:02

[Lord Phillips of Sudbury]

My Lords, I have a sober view of where we now stand as a nation and, in my two minutes, I intend to concentrate on the relationship between business and local communities. I do that from a comparative basis. I am lucky enough still to live in the small town that I was bred in—Sudbury in Suffolk—and the contrast between my first 20 or 25 years and now could not be more stark in terms of business engagement with civic and public life. I do not think that the town is any different from any other in the country.

In my youth, there was strong community cohesion. Most businesses—professional businesses, factories and shops—were locally owned, and there was a happy elision between self-interest and public interest in that, if you did nothing by way of public service, people would notice. They would say, “That miserable so and so, Phillips. He sits in his office coining the money and does”—I must not use the Saxon expression—“very little”.

Today, it is tragically noticeable how few lawyers, doctors, accountants, factory owners, shopkeepers and bank managers—we do not even have those—engage with the community. The disconnect between business and civic life is astonishing and is, I think, at the root of so much that is damaging in our public and national life. It is not because people are bad; it is because of the values by which this society of ours is currently driven. Commercialisation and individualisation have done grave damage to the contribution that business people of all types should and could make, to their great advantage. One irony is that public service has huge come-back and rewards. It brings status, self-satisfaction and so on.

There is no point in pretending that we, here in Parliament, can deal with these matters. We can add a bit of help and a bit of a push but, by and large, this is a deep cultural problem for all of us—individually, collectively and communally. I just want to make that point because, unless we have a reformation and we reconnect, remoralise and re-relate business, I think that our next 20 years could be the worst of the past 200.

20:04

[Lord Bilimoria]

My Lords, when I came to this country from India in the early 1980s, entrepreneurship had the image of Del Boy and second-hand car salesmen. There was a glass ceiling. Today, everything has changed. Entrepreneurship is cool, and I believe that we have a society where anyone can get anywhere, regardless of race, religion or background. Yet business still has such a bad image. We have executive pay. The noble Lord, Lord Sacks, spoke about the noble Lord, Lord Sugar. We have the “Apprentice” image of “You’re fired”. We also have the financial crisis and bankers. I thank the noble Lord, Lord Sacks, for initiating this debate.

At an Industry and Parliament Trust event last week, I chaired a dinner where the theme was trust in business and government. I was shocked when statistics were quoted: only 17% of the public trust business. Even worse, a poll was taken after the Olympics in which the question was, “Are you proud of Britain?”. Overwhelmingly the public were proud of Britain. However, when asked, “Are you proud of British business?”, 4% said that they were. That is shocking.

The Zoroastrian community, of which I am proud to be a member, is based on three tenets: good thoughts, good words and good deeds. When Jaguar Land Rover was taken over by Tata, the company headed and founded by Parsis, the workforce was happy because of Tata’s reputation for welfare in the workforce. The motto of the World Zoroastrian Chamber of Commerce is “Industry and Integrity”—industry as in hard work, of course. The noble and right reverend Lord, Lord Williams, the former Archbishop of Canterbury, explained that “integrity” comes from the Latin word “integrum”, which means “wholeness”. You cannot practise integrity unless you are whole.

Can the Minister explain what more the Government can do to make sure that our people and the country appreciate business and are proud of business? Regardless of everything, British business is still in every sector one can imagine the best of the best in the world. Therefore, why do people not appreciate that it is business that, on the whole, pays the taxes, creates the jobs and pays for all the public services that we all benefit from?

20:06

[Lord Griffiths of Fforestfach]

My Lords, I am delighted to take part in this debate for two reasons. The first is that the subject is hugely important. As we have just been reminded, business is the source of jobs, of wealth creation, of innovation and of tax revenue. The second reason is my regard for the noble Lord, Lord Sacks. As a religious leader in this country, he has been unrivalled in his support for business—but not just any kind of business. He has consistently championed business which serves society, business which has an ethical core and business which has a purpose larger than just profit.

Profit is essential to any business—without profit, a business will cease to exist—but the noble Lord, Lord Sacks, has repeatedly asked what I think are the fundamental questions. What is the purpose of business? What is a business really for? Why does it exist? His answer, with which I totally agree, is that business is not an end in itself. Business has to be seen within a larger framework which puts the human person—or, as he said today, the young unemployed—at the centre of economic life, emphasising creativity, work, integrity in the product, sustainability of the environment and so on. That is why, as he said, business plays a moral role in our society. I also greatly value the theological underpinning—the Hebrew Bible—of what he said, which is not just the basis of Jewish economic ethics but is also the fundamental basis of Christian ethics.

In asking the Government to assess the relationship between business and society, I believe that the paramount issue, as was mentioned by the noble Lord, Lord Bilimoria, is trust. People instinctively know what is good and what is bad, and what is right and what is wrong in business. It is because of this that they are dismayed by the constant stream of bad news from business: mis-selling, price-fixing, money-laundering, tax avoidance and bribery.

I think that government can help by ensuring greater transparency and rebuilding trust, but the greater challenge, which is what I think the noble Lord, Lord Phillips, talked about, is the moral leadership which comes from business itself and which has to emphasise honesty, integrity and openness as the way forward. That is why I really applaud what the noble Lord, Lord Sacks, said.

20:09

[Lord Parekh]

My Lords, it is a pleasure to be participating in a debate initiated so eloquently by the noble Lord, Lord Sacks, and in which my good friend the noble Baroness, Lady Bottomley, spoke so wisely. I want to concentrate in the next two minutes that I have on the paradoxical relationship between business and society. Business simply cannot survive without three conditions. One is an educated workforce and skilled personnel, which society provides. Another is a well regulated market with a civic morality, which only society can cultivate and nurture through its institutions. It also requires a well regulated state, which only a good society can sustain.

Those three conditions constitute the invisible capital that business requires in order to survive. Business depends not just on the financial capital that businessmen produce, but on the moral, cultural and political capital that society at large provides. Business, therefore, is vitally dependent on society, and yet it has the constant tendency to undermine all those three conditions on which it depends for its survival. It is used to counting the money and therefore does not see the value of the invisible capital that society’s moral and political institutions provide. It takes a short-term view of things, and institutions, moral institutions in particular, are built over generations. It also takes an instrumental approach to life and turns almost everything into business so that in a society such as ours, medicine, law and even the priesthood might become a business.

Given business’s hegemonic and expansionist tendency to turn everything into its own mirror image, it inevitably undermines the capital on which it depends. Therefore, it desperately requires a regulatory framework, which is provided by the state. The state therefore is not the enemy of business let alone of the market: the state provides the sole preconditions that business requires in order to flourish. That was the big mistake made by Mrs Thatcher and the neoliberals. They thought that they could deregulate the economy and remove the state. In the process, they released forces that caused the havoc that we are still experiencing. Unless we properly grasp the relationship between business and society and the way in which business depends vitally on the moral capital that society provides, we are in grave danger of repeating the mistakes that were made only a few years ago.

20:12

[Lord Kalms]

My Lords, the noble Lord, Lord Sacks, the Chief Rabbi, has covered the ground well, and I thank him for inaugurating this short but valuable debate. Regretfully, the market economy is both hero and villain. Our task and our duty is to deal with its flaws. It will be fatal if we do not find the cure. The market is selfish, greedy and inward looking. Its thinking can be short term and it is corruptible. The bankers’ poisoned products leave an indelible mark on our memory. The search for gold temporarily blinds the market to its consequences. It deliberately confuses charity with its tax efficiency against a wider social responsibility. Its wealth is for internal consumption—and fat do they all grow.

Today, the market looks to globalisation, particularly in Africa and Asia, to create new wealth. It employs young labour, tax avoidance, subsistence wages, unacceptable working conditions and the corruption of local bureaucracies. Investment often becomes exploitation. Its sole raison d’être is the creation of wealth. The white T-shirt sold for a few pounds with a high margin must not be allowed to hide an invisible sheen of blood and tears.

We all recognise that these defects are part of all of us. The weaknesses are of a human nature. Few are totally innocent, and we must exercise self-criticism. To know the problem is how to solve the problem. Wealth creation must become remodelled. It must include the community and the world, and it can no longer be a golden island. It must embed into its character and soul the concept of ethics. It must ensure that wealth has to be transformed into spreading prosperity.

This concept is not in the stars; it is within our own hands. There are many companies and great philanthropists who pursue this model. They see the City as their responsibility. We must insist that all wealth creators have a duty of care to the society that creates their opportunity.

20:14

[Lord Mitchell]

My Lords, even with a two-minute deadline, I cannot let the moment pass without paying a few words of tribute to the noble Lord, Lord Sacks. This coming September, and after 22 years, he will retire as Chief Rabbi. He has been an inspirational leader and teacher in his own community, but also an exceptional ambassador for Judaism in the public arena. Through his writings and radio broadcasts, he has become an unparalleled moral voice for the nation.

I have always been personally grateful for his wisdom and support, and I know many other noble Lords are too. I am sure I speak for all noble Lords here this evening in thanking him for his service to our country and wishing him well for the future.

[Noble Lords]

Hear, Hear!

[Lord Mitchell]

If the BBC is listening, we must all hope that the noble Lord’s slot on “Thought for the Day” will continue.

The Jewish Association for Business Ethics was partially set up by the noble Lord, Lord Sacks. On two quite separate occasions, we had two leading lights from the UK advertising industry as keynote speakers. I asked both of them the same question: “In view of the UK’s recent actions to ban tobacco advertising, would your agency run advertisements in countries where cigarette advertising is still permitted?”. Both of them gave me the same answer: “If it’s legal, we will do it”. I was shocked.

The issue of strict legality came up again when I attended the Google Big Tent event last month. Not surprisingly, keynote speaker Ed Miliband criticised Google for avoiding UK tax. Eric Schmidt, Google’s worldwide CEO, gave a reply that was a tad disingenuous: “Google pays the tax it is legally due to pay. If you don’t like it, then change the law”. I was shocked again.

Codes of conduct, voluntary tax payments and exhortation are all very well, but seldom enough. Governments around the world need to work harder to ensure that the laws are in place and that the rules are clear. That way, both the spirit of the law and the letter of the law will come closer together, giving business the certainty that it needs to fulfil its vital role in our society.

20:17

[The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Viscount Younger of Leckie)]

My Lords, I am grateful to the noble Lord, Lord Sacks, for initiating this important debate. I had the pleasure of meeting him for the first time when I happened to sit beside him during the gracious Speech. I am grateful to Her Majesty the Queen for unwittingly engineering this. I echo the words of the noble Lord, Lord Mitchell, in thanking the noble Lord, Lord Sacks, and wishing him well for the future.

In considering one of the key raisons d’êtres for business, the fundamental question is whether the pursuit of profit can ever be good for society. In the 1980s, the answer would have been, for most, a resounding yes. For others, especially those who were wary of privatisation, the answer might have been a firm no.

Through the boom years, when house prices were rising, unemployment was low, when gadgets were readily purchased by all and frequent and exotic holidays seemed commonplace, many people might have agreed that the pursuit of profit was not a bad idea. During recent times, people have begun to question the pursuit of profit as a greater emphasis is placed on the benefit of business to society.

This Government are clear that business, and the pursuit of profit, can be a force for good in society by strengthening our economy and bringing together local communities. The noble Lord, Lord Sacks, acknowledged that earlier in his speech. At a fundamental level, businesses contribute significantly to society by creating jobs and improving the skills of the workforce. Many noble Lords made that point today. The noble Lord, Lord Sacks, in particular spoke about the importance of the value of work, the benefit of doing business and the satisfaction that many employees and employers gain from simply trading, which in itself is good for society.

I am pleased to report that figures from the Office for National Statistics published earlier today show that 1.3 million new private sector jobs have been created over the past three years. Some 24,000 more people are in work since the previous quarter, which is a fantastic figure. Figures relating to the period between February and April 2013 show that youth unemployment was down by 43,000. The noble Lord, Lord Glasman, concentrated on youth employment in his speech. It is an extremely important issue on which the Government are focusing in their aim of growing the economy. The noble Lord also made the point that, at the opposite end of the spectrum, older workers have a valuable role to play in the workplace. Further, since 2010, over 1 million apprenticeship starts have been created, and provisional data show that there were 245,000 apprenticeship starts during the first six months of the 2012-13 academic year. Of those, 69,600 were in the 16 to 18 year-old bracket. These figures are very encouraging, but there is a long way to go and we will keep working hard on this issue.

Businesses provide much more than just employment. They can improve the quality of life and well-being of employees, protect the environment and invest in a wide range of community activities. My noble friend Lord Griffiths emphasised that the purpose of business is more than just profits and stressed that employment has a moral purpose. In adding to that point, the noble Lord, Lord Parekh, defined it as a civil morality. Many businesses actively seek to improve opportunities for young people through apprenticeships and by supporting schools and charities.

The Government are showcasing schemes that encourage businesses across the country to support their local communities through corporate responsibility activity. There are many examples of this. In 1999, Greggs, the high street bakers, established its Breakfast Club programme within primary schools in disadvantaged areas. I am happy to say that this now provides a healthy start to the day for more than 10,000 children. In 2011, Greggs donated £250,000 to support existing clubs and open additional ones in areas of need. Lloyds Banking Group’s community investment similarly focuses on community sponsorship and funding local charities, supporting colleagues with their local community engagement and improving levels of financial inclusion and financial literacy in the United Kingdom. This includes building the financial capabilities of people with learning disabilities, thereby enabling access to financial services. Marks & Spencer’s Marks & Start work experience programme for disadvantaged groups has helped more than 800 people in the United Kingdom to get back into work. One might perhaps say, “It’s not just altruism, it’s Marks & Spencer altruism”.

It is not just big business that can make a difference. The Voice of Local Shops Survey polled more than 1,100 independent retailers across the country and found that 80% of store owners are involved in their community in some way, with 71% collecting for a local or national charity and 25% providing sponsorship for local schools and sports teams. The UK should be rightly proud of the many companies that go beyond their own self-interest and undertake activities that are of benefit to business, the environment and, indeed, society. The Government are taking steps to encourage this. At the end of the month, my honourable friend in the other place, Jo Swinson, will be launching a three-month consultation on corporate responsibility with business and other stakeholders. The Government are also committed to supporting and promoting an economy that is comprised of a diverse range of business and organisational models that includes the private sector, the public sector, co-ops, voluntary groups and charities with the aim of achieving a stronger society. This was a point that the noble Lord, Lord Mawson, emphasised in his speech.

Additionally, the coalition agreement in 2010 stated that the Government would take action to support the growth of the social enterprise sector. This sector is more important than ever to achieve an economy where a responsible approach is taken to growth, risk, the business environment and society with the aim of achieving long-term, sustained economic prosperity alongside the responsible use of resources. Its focus on responsible social business practices not only drives its profitability, it improves the well-being of local communities. These businesses are often concentrated in the UK’s most deprived communities, addressing social problems and building economic resilience.

For example, an organisation called Blue Sky is a social enterprise that focuses on reintegrating ex-offenders into society by offering employment and training opportunities. It exemplifies the economic and social good catalysed by social enterprises. To date, it has provided more than 700 jobs to ex-offenders. Some 51% of them leave with formal training qualifications, 48% move into permanent employment and, on average, only 15% have reoffended, which is a quarter of the national average. Blue Sky is also a growing profitable business whose commercial income has increased sixfold since 2007. It is helping to break the cycle of reoffending and is challenging society’s negative perception of offenders. Another example is Cockpit Arts, an award-winning social enterprise based in London, which is the UK’s only creative business incubator for designer-makers. It works with hundreds of businesses to help them conceive, develop and deliver innovative products to take to market. Moreover, in 2012, Cockpit Arts reinvested its profits into its Creative Careers for NEETS programme, providing jobs and work experience placements for local unemployed people with raw creative talent.

My right honourable friend in the other place, Dr Vince Cable, has already established quarterly bilateral meetings with Social Enterprise UK, the leading trade organisation for the sector. These productive and positive meetings help us to identify the acute challenges facing the social enterprise sector and look at what the Government can do to help. We are introducing new tax relief to encourage successful business people to invest in social enterprise, and it is good to have support in this area from my noble friend Lady Bottomley. Social enterprises are also challenging the glass ceiling, with 86% of their leadership teams boasting at least one female director and 27% with directors from the black and minority ethnic communities.

The relationship between arts and business is extremely important to enable a thriving and resilient arts and cultural sector which enriches society. Businesses provide a vital funding source that is essential to maintaining our high-quality arts culture. For example, for many years BP has supported the BP Portrait Award for the National Portrait Gallery, which encourages young artists to develop their portrait technique. Last year, more than 2,000 artists from 75 countries took part in the competition and almost 250,000 visitors attended the event. The Frieze London art fair, sponsored by Deutsche Bank, is one of the world’s most influential contemporary art fairs and brings an international audience to London every October. These sponsorships are vital for a greater number of people to experience and be inspired by the arts, irrespective of their background.

I turn now to a number of points that were raised by noble Lords in the debate. I should say to the noble Lord, Lord Bilimoria, that I greatly enjoyed the television programme this week in which he featured so strongly. He made the point that instilling the words “industry” and “integrity” into the workforce is important because, in turn, they create a certain wholesomeness that leads to better well-being in society. That is a point which is very well made. The right reverend Prelate the Bishop of Chester brought up the subject of the living wage. It is an important issue, and I thank him for raising it. I will write to him with some details on the living wage in relation to this particular building, which I think was the point that he made.

The noble Baroness, Lady Warwick of Undercliffe, asked whether the Government would publish the UN guiding principles on business and human rights. As I mentioned earlier in my speech, on 27 June we are launching a consultation on a UK framework for action on corporate responsibility, and we will take full account of the UN guiding principles. The final document setting out government and business corporate responsibility commitments will be published in December this year. I believe that it was my noble friend Lady Bottomley who raised the issue of ethical supply chains, as did my noble friend Lord Kalms. The Bangladeshi factory crisis and the horsemeat scandal illustrate the importance of promoting ethical and responsible supply chains. The Government are encouraging businesses to value and develop responsible supply chains. My noble friend Lord Kalms also referred to transparency, and indeed he is correct to say that we need to be more transparent in the supply chain. That will lead to better information being made available to consumers, thus allowing them to make a choice as to whether a £2 T-shirt is actually worth all the blood, sweat and tears.

The initiatives discussed today provide just a few examples of the Government’s engagement with business, a relationship that this Government seek to improve and strengthen.

20:29

House resumed. Committee not to begin again before 8.38 pm.

Care Bill [HL]

Wednesday 12th June 2013 Lords Chamber

Committee (3rd Day) (Continued)

20:38

Clause 79 : Unitary board

Amendment 73

Moved by

[Lord Warner]

73: Clause 79, page 66, line 13, at end insert—
“( ) a Chief Inspector of Hospitals,“( ) a Chief Primary and Community Care Inspector,”

[Lord Warner]

My Lords, I have put down this amendment to explore briefly the Government’s thinking on the appointments set out in the amendment. As has already been said, I am sure we are all delighted that Professor Sir Mike Richards has been appointed Chief Inspector of Hospitals. I was doubtful about the practicality of this post but if anybody can make a success of it, I think Mike Richards can. Why did the Government not make this a statutory post? Is it because they see it as a time-limited appointment?

The second part of the amendment explores a slightly wider issue. I know that the post of Chief Inspector of Social Care has been advertised but does the Minister think that the post has been too narrowly drawn and represents a bit of a missed opportunity? I know from remarks he has made at events I have been at that the Health Secretary has considered whether there should be a chief inspector of primary care, which I am sure has strengthened his relationship with GPs. For my part, poking around in some of the murkier corners of primary care and trying to strengthen it would be no bad thing.

However, the wider system problem we face in the NHS is the weakness of the combined set of non-hospital services and their integration with social care. That weakness is now leading to moves in some places for acute hospitals to think of themselves as the base for community-based services. I suspect that is a development we will regret in the longer term, particularly if those services end up bearing a disproportionately high amount of the overhead costs of acute hospitals. Can the Minister say a little more about whether the Government are considering appointing a chief inspector of primary care and whether further consideration could be given to widening the brief of the Chief Inspector of Social Care to embrace community health services and possibly primary care? I beg to move.

[Lord Hunt of Kings Heath]

My Lords, my noble friend’s amendment is very penetrating. Under this clause the Secretary of State will appoint only the chair and other non-executive members while the CQC appoints its own executive members, including the chief executive. I draw the noble Earl’s attention to our debate on day one of Committee when we discussed the governance of Health Education England and the Health Research Authority. I still fail to understand why the Secretary of State has to approve the appointment of the chief executive of those bodies when he does not in relation to the CQC. I take from it that HEE and HRA are less independent than the CQC. It would be interesting to know whether he can confirm that.

I thought my noble friend made a very powerful point about the appointment of a chief inspector. I endorse his remarks about the appointment of Mike Richards. He commands great respect, but I wonder why it is not in the Bill. It seems to me that the relationship between the chief inspectors and the chief executive and the board of the CQC is going to be a delicate one. Once you nominate somebody as chief inspector the implication is that they are independent in their job. My experience when I was at the DWP and responsible for the Health and Safety Executive is that it had some chief inspectors. There was the equivalent of the Nuclear Installations Inspectorate, although that has now gone, and the Chief Inspector of Construction. It was felt necessary in some of the most important sectors to have a figurehead. My understanding was that when it came to issues to do with the regulatory function they were independent and could not be second-guessed by the board. The relationship between the chief inspectors and the board is very important. I wonder whether the noble Earl’s department is storing up trouble for the future by not making them statutory post-holders so that it is absolutely clear in legislation what their responsibility is. I can see problems arising in future on this.

This issue about putting primary and community healthcare together will also be very important. The breakdown in the NHS over the past few months has been a breakdown in integration between different parts of the service. Putting primary and community care together would be very helpful.

[Baroness Wall of New Barnet]

I support the amendment and in particular the argument for the chief primary and community care inspector. Many of us who operate within the service—even people who use it—know that often the weakness has been in the delivery of primary care. We talked earlier about reconfiguration. The only way that that would be successful is if we had better primary care facilities and care that people could access nearer to home—all aspirations that the Government have. I strongly support having that watchful eye on making sure that primary care works effectively.

20:45

[Baroness Northover]

My Lords, I thank noble Lords for their contributions to this mini-debate on Amendment 73. We are sympathetic to the view behind this amendment —or what seems to lie behind it—which seeks to ensure that the new chief inspectors will be given a place on the board of the CQC. I echo here the praise of the noble Lord, Lord Warner, for Professor Mike Richards. I know that the professor’s cancer colleagues will miss him in that field.

Noble Lords are absolutely right about the importance of improving quality and in particular of trying to drive up quality within primary care. The Secretary of State announced the appointment of a Chief Inspector of Hospitals as part of the Government’s response to the Francis review into Mid Staffs. As has been referred to, since that time the Government have also announced the positions of a Chief Inspector of Social Care and a Chief Inspector of General Practice. These three chief inspectors will sit within the CQC and lead for it on the inspection and regulation of all registered providers of health and adult social care. They will be high-profile positions—as the appointment of Mike Richards demonstrates—and will speak for the CQC on the quality of care that they find. As such, it is likely, as noble Lords have indicated, that they will have a lot to offer the CQC board in knowledge, experience and leadership.

The noble Lord, Lord Warner, asked about the areas that the Chief Inspector of General Practice might cover and whether the post might be drawn more widely. In some ways, that rather bears out my point: setting this in stone in statute may not be the best way to make everything link up so that the new positions work as effectively as possible. The CQC needs to move this forward so that it can best drive up quality. It will be for the CQC to determine the exact remit of each of the chief inspectors. All providers of registered health and adult care services will fall within one of the chief inspectors’ remits. Perhaps that will reassure the noble Lords, Lord Warner and Lord Hunt. The CQC is working up detailed proposals. No doubt it will pay attention to what noble Lords have said. Broadly, the Chief Inspector of Hospitals will cover acute trusts, including mental health trusts; the Chief Inspector of Social Care will cover providers of regulated adult social care, including care homes and domiciliary care agencies; and the Chief Inspector of General Practice will cover GP and dental practices as well as walk-in centres, private healthcare and independent ambulance providers. Clearly, the CQC will look at how it gets comprehensive coverage.

We have deliberately avoided requiring that these inspectors should have a seat on the board for two reasons. First, the aim of Clause 79 is to give the CQC more autonomy in determining which executive members sit on its board. This is in line with best practice, as no doubt noble Lords will recognise. We would not wish to remove this new autonomy by requiring that any executive, other than the chief executive, must sit on the board. Secondly, we have designed the chief inspector roles to be non-statutory. They are internal to the CQC, and the CQC will have the power to design, shape and adapt the roles in a way that best enables their operational effectiveness. I hope that that helps to reassure the noble Lord, Lord Warner.

[Lord Hunt of Kings Heath]

I am very grateful to the noble Baroness. Does that mean that at the end of the day the chief executive of the CQC can overrule the chief inspectors? That must be the implication of what she said.

[Baroness Northover]

Perhaps I could carry on. I will come back to that in a minute.

Setting these roles as non-statutory clearly gives the CQC important flexibility to design them to fit their method of regulation in the fast-developing field of health and social care, without the constraints of prescribing the functions of the chief inspectors in statute. As these roles are not mentioned in the legislation, it would not be appropriate to require in legislation that they should have a seat on the board. Having said that, discussions with the CQC chair and chief executive showed them to share the view that chief inspectors will have much to offer the board. Their preference, subject to appropriate board approval, is that when practicable these executives should be appointed to the board. Given the intended importance of these roles, we fully agree with that. In advance of the new legislation coming into operation, I can confirm that the Secretary of State would consider using his current powers to appoint the three inspectors to the board if that was requested by the present CQC chair and chief executive.

The noble Lord, Lord Hunt, asked about Health Education England and the HRA. These will be established as unitary boards, which is to say that they consist of both executive and non-executive members. I can clarify that the chief inspectors are accountable to the chief executive and to the CQC’s board. They will speak for the CQC on their findings when they inspect providers. Having clarified these areas and reassured noble Lords about the significance of these roles and the need for flexibility, I hope the noble Lord will be content to withdraw his amendment.

[Lord Warner]

Clearly the noble Baroness has clarified matters, but whether she has reassured me is another question. I think the Government underestimate the profile of the Chief Inspector of Hospitals in particular. There is no doubt that this will be a very powerful and important post with an enormous profile. The idea that this person can be overruled by the chief executive and the board, as this legislation sets out, poses a problem I certainly want to think more about.

I also think that there is a gap here. Community health services are not clearly in anybody’s remit. I am sure my noble friend Lord Hunt would agree that if we were to identify one black hole where there is not a great deal of data on performance and quality, it would be community health services. It is an area that has not been probed well by independent inspection, and as far as I can see the game plan is to have no inspector looking into that area. Given everybody’s concern about integration, it seems a bit of a missed opportunity for there not to be some linking up there.

I want to consider this much further. It would be helpful if Ministers sent the Committee the job description for the three inspectors they propose. In my experience, it is rather difficult to appoint anyone to anything without a job description. It would be very helpful to our deliberations to have that before Report.

[Lord Hunt of Kings Heath]

It seems to me that unless this is sorted out there will be problems in the future, notwithstanding the calibre of the current leadership of the CQC, which I readily acknowledge. If the chief inspector does not have total operational independence when acting as chief inspector, I see a recipe for potential trouble. We will not reach Report until October, so there is plenty of time. My noble friend and I would be very interested to have at least some discussion about how the CQC will avoid the kind of conflicts that clearly we would rather not have, if at all possible.

[Baroness Northover]

I am very happy to take back to the department the request for further descriptions of the jobs in these cases. We should also bear in mind that the aims of these chief inspectors, as part of the CQC, are to maintain safety and effectiveness and drive up quality. They have shared aims; it is not as if they have different ambitions in this regard.

[Lord Warner]

That is extremely helpful, but my noble friend is absolutely right. Bearing in mind our earlier discussion about warning notices and enforcement, in reality what the chief hospital inspector says in many cases is what will determine whether the CQC goes ahead with a warning notice, which might trigger trust special administration. That is a really powerful position in the public arena. I would welcome, with my noble friend, a discussion with Ministers about this, but in the mean time I beg leave to withdraw the amendment.

Amendment 73 withdrawn.

Clause 79 agreed.

Amendment 73A

Moved by

[Lord Hunt of Kings Heath]

73A*: After Clause 79, insert the following new Clause—
“National Reporting and Learning System
The National Reporting and Learning System shall come under the control of the Care Quality Commission.”

[Lord Hunt of Kings Heath]

My Lords, we come to a very important clause, which I think the Government might describe as a Francis clause since it clearly seeks to respond to the Robert Francis inquiry into the Mid Staffordshire hospital problems. In fact, judging by the rigour of the Government’s initial response to Mr Francis, one might have thought that there would have been a series of clauses reflecting the 290 recommendations. It would be helpful to know why the Government consider that this is an adequate legislative response. Can the Minister say whether there is likely to be further legislation or whether, in effect, this is the definitive legislative response to the Francis report?

Clause 81 creates a new offence so that providers of health services and adult social care that supply, publish or otherwise make available information that is “false or misleading” could be subject to criminal sanctions. The offence applies to a care provider as a corporate body, not to individual directors or employees. Clause 81 outlines the scope of the offence, including where care providers are potentially subject to it and the type of information to which it relates. I understand that further detail will be specified in the regulations as appropriate.

Let me say at once that this clause is welcome, as far as it goes. However, I have two questions to ask. First, is it possible to be rather more explicit than the Explanatory Notes are as to what information is likely to be covered by the offence? This is important as I have received a briefing from NHS employer organisations, which recognise the seriousness of the potential offence in this clause and would like to see clarity as to the kind of information that is embraced.

It is disappointing that the clause does not contain a provision to enact a duty of candour, as recommended by Robert Francis. That is the subject of my Amendment 76B. He said that a statutory duty should be imposed to observe such a duty of candour on healthcare providers who believe, or suspect, that treatment or care provided to a patient has caused death or serious injury to inform that patient or another duly authorised person as soon as is practicable. At Second Reading, the noble Earl said that the duty of candour would be dealt with through CQC registration via regulations. I am very puzzled that such a key recommendation—it was almost the headline recommendation—of the Francis report is not going to be dealt with in the Bill when the Government clearly have the vehicle to put it there, so I am very sympathetic to my noble friend Lord Warner’s Amendment 77, which I think is consistent with my Amendment 76B. It is always nice to feel that I am consistent with my noble friend.

20:59

It is also noticeable that the Government appear to have rejected Francis’s recommendation to place on individuals a statutory duty of openness, candour and transparency. I am not unaware of the concerns in the NHS and social care that an individual duty such as this might perversely lead to increasing the incentives to staff to hide information about adverse events because of the potential repercussions. It has certainly been put to me that any legislative proposal must avoid dissuading the reporting of any kind, deterring clinicians from undertaking complex medical cases or discouraging innovation.

I well understand that and why the Government may be somewhat reluctant to go down that route, but it is noticeable that Mr Francis has expressed in public his disappointment with the Government’s response. Most recently, he was reported as saying that prosecutions should occur only for the most serious cases for the sorts of behaviour that he saw so many examples of in the Mid Staffordshire inquiry, as he describes it,

“of absolutely appalling care, insulting to human dignity and in some cases life-threatening behaviour leaving people naked, unfed, covered in faeces”.

He went on to say:

“Unless we have a criminal offence, we will not be reflecting adequately the gravity of the terrible things it seems are capable of being done in our hospital wards if they are not properly run”.

He concluded:

“If we don’t reflect somehow the fact that the public rightly think some things are terrible and there should be real accountability for them, then I believe the public confidence in the NHS will evaporate”.

I do not pretend this is an easy question, but I would be grateful if the Minister would inform the House of his thinking, the extent to which Professor Berwick’s review will input into this, and whether the Government have closed the door completely on individual statutory liabilities.

Of course, I was tempted to put down amendments relating to all 290 recommendations of the Francis report, but I have chosen two as symbols because they are so important. I would be interested to know whether the Government are going to move on them. The first relates to the consequence of the abolition of the National Patient Safety Agency. We debated this in the Health and Social Care Bill. I have a particular interest since I was a former chair, although the noble Lord, Lord Patel, has also chaired the NPSA. The key point about the NPSA is not the organisation. It practically ran the national reporting and learning system. This was developed by the former Chief Medical Officer using the example of the airline industry, where airline staff are encouraged to report near misses on the basis that they will not be penalised for doing so, but by reporting one can learn and improve safety. The airline industry is a very good example of how that has occurred.

The Government’s current decision was to transfer responsibility for the national reporting and learning system to NHS England. I think they have sub-contracted the job to Imperial College, which is fine, but I have concerns about NHS England being the repository of the national reporting and learning system, because the role of NHS England is basically to beat up the system to deliver on the targets. I heard with interest Sir David Nicholson’s rather extraordinary speech where he presented an image of NHS England taking forward the great vision of the future and taking everyone with it. However, those of us on the ground see old-style performance management operating well and effectively in NHS England, and there could be issues in the future with staff being reluctant to report incidents because they are sent to the management body that oversees the performance of the NHS. Robert Francis said, first, that the NPSA’s resources need to be well protected. He clearly recognised the importance of the national reporting and learning system and made clear that he thought that the responsibility should be placed under the regulator. I wonder if that is not a sensible suggestion. I do not think it is at all satisfactory that it remains with NHS England.

Amendment 73B, my second, comes back to the current debate about safety and quality in the NHS. One thing that has become clear from Mid Staffordshire is that, in its urgency to get foundation trust status, the board was prepared to squeeze the staffing numbers. That was surely one of the main contributors to the poor quality of care. I do not think we can run away from the fact that there is a direct relationship between the number of clinical staff treating patients and the quality of care. Interestingly, Mr Francis, in one of his earlier recommendations, said:

“The National Institute for Health and Clinical Excellence should be commissioned to formulate standard procedures and practice designed to provide the practical means of compliance, and indicators by which compliance with both fundamental and enhanced standards can be measured”.

He went on to say:

“The standard procedures and practice should include evidence-based tools for establishing what each service is likely to require as a minimum in terms of staff numbers and skill mix. This should include nursing staff on wards, as well as clinical staff”.

Are the Government going to ask NICE to be commissioned to undertake that work? If they are, the Care Quality Commission clearly needs to take that into account when it monitors, visits and inspects NHS organisations and, indeed, other organisations for which it is responsible.

I am not holding a candle for rigid staff to patient ratios on every ward in the country being set at a national level, which is why I am attracted rather more to Robert Francis’s concept of benchmarking. However, I have no doubt that he is right to want to try to safeguard quality by making sure that enough staff are available in clinical areas. We cannot escape from this. Given the financial constraints on the NHS, there has to be some protection when it comes to staff numbers, and the Francis report offers us a rather sensible way through on this. I beg to move.

[Baroness Finlay of Llandaff]

My Lords, this is a very interesting group of amendments. I will initially address the amendment relating to staffing requirements. I declare an interest, having been involved with Gwent Police at the beginning of its Operation Jasmine investigation into nursing homes. It became evident there that the staffing levels in nursing homes—which were owned privately by a GP at the time—fell to such a level that the care was non-existent. What was happening was absolutely appalling. I urge the Government to ask NICE to look at this and come up with some guidance. The biggest problem may well be outside of the hospitals, in the nursing home and care sector. It is not only the staffing levels and the skill mix but about how staff are expected to behave, what they are expected to do and their taking on broader responsibilities for the care of patients. I am not sure whether the wording is right for the Bill itself, but it might be helpful for NICE to come up with some guidance that CQC could use for benchmarking.

It is important that we look at the organisational duty of candour and are cautious so that it cannot simply get focused down and pinned on the individual. The Government have done a great deal of work already, as has the General Medical Council, on the duty of candour of doctors towards patients when something has gone wrong. Sadly, however, the medical defence unions have all found that doctors, by and large—two-thirds of doctors have reported this—are working in what they feel is a blame-and-shame culture in which it becomes increasingly difficult to report errors, and 70% of them report that they do not feel supported when they report errors. However, there is an undoubted need for there to be a duty of candour to patients when something has gone wrong.

One of the clinical difficulties that arise is that in very complex situations, however well a team functions, things sometimes do not go the way you expect them to. It is important to be able to differentiate that situation from one in which somebody has done something wrong, which has resulted in harm to a patient. Therefore, I have a slight worry about whether perverse outcomes might occur that could increase that fear of blame and shame. However, it is important to emphasise that since April this year there is a contractual duty on organisations providing care that advises that doctors should tell patients when something has gone wrong. That has been a major culture shift for many, but patients are, in fact, very receptive to being told when something has gone wrong. I have done it myself with the team, and the other, non-medical members of staff were astonished at how welcoming the patient and their relatives were to being told that something had gone wrong and what we were doing about it. There is also already the ability to impose fines, with the recovery of up to £10,000 from the provider and criminal prosecution for significant or recurrent breaches of the duty of care, and, of course, if an individual professional has failed to be candid about an error, they should be referred for impaired fitness to practice and potential suspension or erasure from the professional register, whether it is a doctor or a nurse.

I will give a quick clinical example of where the situation could get complicated. Take a patient who is prescribed a drug such as methotrexate and is to be monitored regularly by the GP. The GP asks the receptionist to put a flag on the system, but the receptionist forgets to do it. The patient carries on taking the methotrexate, becomes neutropenic—has bone marrow failure—is admitted to hospital and is septic. The patient recovers from that, and in hospital is told exactly what has happened. When the patient leaves hospital, understandably very angry, and goes straight round to the GP, the GP has not yet received the discharge letter and finds it difficult to understand what has happened, and there have been delays in the system so that the discharge letter was delayed in getting to the GP.

That is the kind of catalogue within a whole team of lots of people not quite doing it right, and it becomes very difficult to pin the blame on someone, although undoubtedly an error occurred. That is why I support the duty of candour on an organisation, but we have to be careful that we do not end up creating such a culture of fear and blame that other parts of the organisation get scapegoated and blamed, rather than there being corporate ownership for what has gone on.

One of my other concerns about Amendment 76B is in the first part of the amendment, about being,

“honest, open and truthful in all their dealing with patients and the public”.

I would like to be assured, by those who tabled the amendment, that there is no conflict with the requirement for confidentiality in terms of what you are told by a patient. I could see a clinical situation in which information held by a patient might have made their care more difficult. It might have been disclosed to only one healthcare professional, and the patient may have said that it was not to be disclosed to anybody else. Therefore there are complexities behind this, so that enforcing it in law and imposing sanctions and penalties might become difficult.

21:15

[Lord Warner]

My Lords, I shall speak to Amendment 77 standing in my name. I have taken a slight different approach from that of my noble friend, but I was out of the traps a little before him. I was trying to do something slightly different, but I am equally happy with his rather more elegant amendment on the duty of candour. Whether I have got the wording of the amendment right is another matter, but I was trying to link the organisational responsibility for a duty of candour to the registration process. Therefore, that right at the outset, as a condition of registration, the organisation had to sign up to the idea of a duty of candour.

When one is in the patient’s position, the duty of candour in relation to the employee becomes very important. The patient sees individual people, not necessarily something called an organisation. On the other hand, for the reasons that the noble Baroness, Lady Finlay, mentioned, one has to provide cover for individuals who operate in that organisation, both to protect them from unreasonable attacks by the victim of the mistakes, but also from attacks by the employer for blowing the whistle on them. In this amendment, I am striving for an obligation on the employer—the provider of the services—to have a duty of candour as part of their registration conditions. At the same time, the employee should be protected against unfair employment practices or unfair criticism. One is then forced along a path—which is not fully explained in my amendment—where the contract of employment between the individual and the employer gives some protection to the employee who blows the whistle.

That is quite complicated stuff and this is a complicated area, but we have to strive not just for organisational candour, but for some protected way for the employee to level with people when things have gone wrong. I think the secret lies somewhere in the contract of employment. We do not want that routed only through doctors. In a care home, for example, it will not be the doctors talking to the residents, their families or whoever. We need to do more work on this. Given that this was such a high-profile issue in the Francis report I, like my noble friend Lord Hunt, find it surprising that we are not trying to deal with it in the Bill, complicated though it is. We need to put some wet towels around our heads to try to find a way of capturing this in the Bill, so it is both fair to the employer and to the employee. That is what I am trying to do. Whether I have succeeded in my simpler version in Amendment 77 I am not sure, but that is the thinking behind it.

[Baroness Jolly]

My Lords, I welcome the debate on the duty of candour. It almost seems as though we are rewinding to 18 months ago, when we had similar debates during the passage of the Health and Social Care Bill. Although I would not have wished the events at Mid Staffordshire Hospital on anybody, I am really pleased that as a result the Francis report recommended a duty of candour. I therefore welcome the Government’s intention to implement that duty. However, as we have seen over the past 20 minutes, nothing is as straightforward as it first seems, so a lot of hot-towel work needs to be done to get this right.

I shall not detain the Committee long, but there are two sets of choices that the Government have made and I am curious why they made them. The first is whether the duty of candour is on the individual or on the organisation. The second, to which the noble Lord, Lord Warner, has just referred, is whether it is going to be in the Bill or in secondary legislation.

The duty of candour will cause a large change in people’s behaviour and it should be a game changer in lots of ways. As an aside, I think that complaints will fall. If somebody turns around and says, “I’m sorry”, people are less likely to complain. Certainly, those of us who have been involved in complaints will know that on many occasions patients just want someone to say that they are sorry and to explain why and how it went wrong, because they do not want it to go wrong in the same way for anybody else. So there might be an unintended consequence there.

When the Minister sums up, I would like to know why the decision was made not to put the duty in the Bill. Is that decision irrevocable?

[Baroness Masham of Ilton]

My Lords, I support Amendments 76B and 77. There has been so much said that there should be a change in the culture in the NHS after the scandal of Mid Staffordshire Hospital. Amendments 76B and 77, dealing with the duty of candour, might help to do this. For years, relatives of patients who have died or been badly damaged have not always been treated in an honest and open way; many times, the causes have been covered up and there has been much suffering by those who need to know the truth and have an apology. It is also terrible that when people who fear for patients’ safety speak out to warn of unsatisfactory and dangerous situations, they are silenced and gagged. Surely, we should do something about that. It is our duty to speak out now and make patients’ safety a reality.

One elderly Member of your Lordships’ House told me yesterday that she was frightened in case she might have to go to hospital. How many people throughout the country must feel like that? The culture of fear and neglect must be changed. I hope that the Government understand that.

[Lord Campbell-Savours]

My Lords, I have considerable reservations about the whole question of the duty of candour, as I was saying to colleagues earlier today. I want to put to a counterargument to the House.

Recommendation 177 of the Francis report says:

“Any public statement made by a healthcare organisation about its performance must be truthful and not misleading by omission”.

Therefore I presume that, under a duty of candour arrangement, there would be a requirement to admit negligence, if there was negligence.

After my last visit to the accident and emergency department at Wexham Park Hospital in Slough, I left the car park and saw a huge sign on a van at the side of the main road, which said, “If you believe you’ve been a subject of medical negligence, please ring the following number”. I worry that with the way in which this whole issue is being addressed, under the conditions of the duty of candour, which in principle I would like to support, those people who put up those signs may well make rather a lot of money out of it. They will find a basis on which to start bringing more and more actions against the National Health Service. I do not know the way round it, because if that is what is happening, and there are so many people out there who are prepared to bring legal action, if they believe that they have the remotest chance of winning such an action, the duty of candour will be used as a means to bring about those actions.

I cannot see how we can stop it. That being the case, I believe that we are going to find that, irrespective of this duty, people will, to put it bluntly, continue not necessarily to tell the truth when responding to complaints that are being made by members of the public over their healthcare. I am sorry to dissent slightly from my own Bench on this matter, but I have a concern here and I think that the Minister, in winding his up, should be far more open in this discussion about the possibility of litigation arising out of the introduction of the duty of candour. As I say, I would like to pursue it and I support it in principle, but I am worried that it may lead to more actions.

What would I do as an alternative? In the contribution that I made on Monday, I concentrated on what I thought were the problems from which complaints arise. These are, essentially, simple complications that arise on the ward through minor negligence or lack of concentration by healthcare assistants or nurses. I think that we have to go back a stage from this whole process of candour, litigation and complaint systems, to what is actually happening on the wards so as more effectively to police the way that treatment is carried out more.

At the end of last year, I and a colleague in the Commons conducted interviews with many people involved in healthcare about the problems on wards in hospitals. I drew the conclusion that we should have on every ward a very clear set of entitlements set out on large boards whereby patients and their relatives may understand their entitlements. Instead of being hesitant about going to complain within a ward about the way that they were being treated, they would be able to point to a document and say, “Look, Sir or Madam, this says that that is my entitlement”. If we can get across the fact that people have entitlements, and that they have a right to higher standards of healthcare on wards, there will be fewer complaints in those circumstances and so less incidents of complaints that, in the responses, must rely more on this duty of candour, if it were to be introduced.

I am concerned. I think that we are looking at this problem from the wrong end. We should go right back to the ward and deal with the problem there. They say that ward problems are about leadership on the ward. I am not altogether convinced of that. You cannot have someone on the ward running around telling everyone what to do all the time. You have to have a process of accountability for those who work on the ward to the patient and to the patient’s relative, being their representative. I will not go into my idea about these signs on wards in great detail tonight, but perhaps I will at another stage in the Bill.

I will however deal in detail with one area under Clause 81. An offence is defined as follows:

“A care provider of specified description commits an offence if … the information is false or misleading in a material respect”.

So that is an offence. The care provider is defined under subsection 3(b) as,

“a body (other than a public body)”—

in my view, that means a private body—

“which provides health services or adult social care in England pursuant to arrangements made with a public body”—

that might well be the commissioning body—

“exercising functions in connection with the provision of such services or care”.

I understand that to mean that you could have a private nursing home with an NHS contract to provide continuing care where the moment that they receive their first patient under continuing care arrangements—an NHS patient in a private nursing home—then that nursing home then falls under the provisions of subsection 3(b). Have I got that wrong? That means that the commission of an offence, if

“the information is false or misleading in a material respect”,

would apply to a nursing home where just one person is in receipt of care paid for by the National Health Service under a contractual arrangement, as against a nursing home next door where there are no NHS patients under a continuing care contract and all the patients are privately funded. There, that offence would not necessarily apply. That is how I understand what is said in that clause. I hope that the Minister will clarify the matter.

21:30

[Baroness Northover]

My Lords, I welcome this very interesting debate which has gone in various directions. We have a number of amendments to consider here.

Amendment 73A would transfer the responsibility for the National Reporting and Learning System from NHS England to the Care Quality Commission. We wish to take the opportunity to underline the importance of the data and information available through the NRLS to the work of the Care Quality Commission. Indeed, a key component of the CQC’s new three-year strategy sets out how it will make better use of intelligence to inform inspections. However, I remind noble Lords that it was only on 1 June that responsibility for the National Reporting and Learning System was transferred to NHS England. This transfer puts patient safety at the heart of the NHS—I heard what the noble Lord, Lord Hunt, said, but I think it is extremely important that it is at the heart of the NHS—and will build on the excellent work of the National Patient Safety Agency. NHS England plans to develop a responsive NRLS that will provide a one-stop shop for NHS clinicians, patients and the public.

Additionally, noble Lords may be aware of the Berwick review of safety—reference was made to it—which seeks to learn lessons from the Francis report. It will report in July on a whole system approach to ensure that there is zero tolerance of harm in the NHS. We will, of course, give full consideration to any recommendations that that review might make on the effectiveness of the NRLS. In view of these important developments and reviews, we believe that reallocating this work now would be unnecessarily disruptive.

Amendment 73B introduces a new clause which would require the CQC to have regard to guidance on staffing numbers and skills mix in carrying out all its functions. I fully understand the sentiment behind this. All noble Lords will agree that high-quality care is dependent on the people giving it. We heard from the noble Lord, Lord Campbell-Savours, about the problems that arise when that breaks down. Clearly, the right staffing in terms of numbers and skills is vital for good care. It therefore follows that staffing levels and skills mix are key considerations for the CQC in regulating quality of care. However, as the noble Lord, Lord Campbell-Savours, says, that is not necessarily sufficient. The CQC’s registration requirements place a clear legal duty on providers to have sufficient numbers of suitably qualified, skilled and experienced staff in place for the services provided. It is the responsibility of individual providers to be accountable for staffing levels and the skills mix of staff in their organisations. Where a provider does not meet the staffing registration requirement, the CQC is able to use its enforcement powers to protect patients and service users. However, I note what the noble Baroness, Lady Finlay, said about this being an issue which is not necessarily best placed in primary legislation. The point is to try to achieve quality, safety and efficacy.

The CQC will shortly review and consult on its registration requirements. We intend to amend the requirements so that they will include fundamental standards. These will set the basics below which standards of care must never fall. We can assure noble Lords that the new chief inspectors that we talked about previously, based within the CQC, will have the power to inspect and assess staffing numbers and the skills mix as part of examining the quality of care and will be able to take any necessary action as they consider appropriate. Noble Lords asked whether NICE might become involved in that. We believe that the current legislative arrangements already require the CQC to assess staffing levels. However, we will work with NICE, the CQC, NHS England and other partners to review the use of evidence-based guidance and tools to inform staffing decisions locally.

Amendments 76B and 77 each introduce a stand-alone duty of candour in primary legislation. We had an extremely interesting debate that demonstrated the complexity of the issue. As the noble Lord, Lord Warner, noted, it is a complicated area. The noble Baroness, Lady Finlay, illustrated that, as did my noble friend Lady Jolly and the noble Lord, Lord Campbell-Savours. He noted that there could be unintended consequences such as unwanted litigation. However, my noble friend Lady Jolly said that often all that patients and their families need is clarity and something being admitted to. All these issues show how complicated the area is. The noble Baroness, Lady Finlay, spelt that out.

The Government share the view that providers of health and care must be open in their dealings with patients and service users. Our response to Robert Francis’s report makes a clear commitment to introduce a statutory duty of candour. I therefore wish to reassure noble Lords that we are doing that. In particular, I should like to reassure the noble Baroness, Lady Masham, on that point. That is what we are doing. The route that we are taking is perhaps endorsed by the nature of this debate. We see this as something that is better taken through by secondary legislation. Let me spell that out. The Government intend to introduce an explicit duty of candour on providers as a CQC registration requirement. This will require providers to ensure that staff and clinicians are open with patients and service users where there are failings in care. I hear the warnings voiced by the noble Baroness, Lady Finlay. In the end, the aim has to be to improve the quality, safety and efficacy of care. I note what she said about confidentiality.

As with all requirements for registration with the CQC, the Government intend that the duty of candour should be set in secondary not primary legislation. There are very strong reasons for that. Using secondary legislation will enable us to expedite the introduction of this duty and provide a degree of flexibility to get the design of the duty right. I am sure that the department and my noble friend Lord Howe will welcome noble Lords’ engagement, bringing their own wet towels if they wish to, as we take this forward. Secondary legislation will still allow for full parliamentary scrutiny, given that the changes to the regulations that set CQC registration requirements will be subject to the affirmative procedure in both Houses. The duty itself will have the same legal power in secondary legislation as it would in primary legislation. There is also the additional advantage that in such a new and important area we can refine this new duty over time, if noble Lords’ warnings prove to be significant. That is why I commend the Government’s preferred approach of setting the new statutory duty of candour through secondary legislation.

Amendment 77A has the effect of removing the power to specify the type of information and the type of care provider within scope of the new false or misleading information offence. This is a different but obviously related area. This would mean that we have a criminal sanction that applies to all information required by legal obligation, including under contract, which would be disproportionate. It is important that the offence does not inhibit providers from sharing information voluntarily, but we also need to keep the flexibility to respond to new information or different priorities for information over time.

We appreciate that noble Lords will be interested in understanding more about the types of providers to which this offence will apply. The Government are still considering the scope of the offence and I am absolutely certain that my noble friend Lord Howe will be happy to discuss this further with noble Lords.

We start from the issues raised in the Francis inquiry. We are therefore clear that the offence will apply to providers of NHS secondary care. This includes NHS trusts, foundation trusts and independent sector providers of NHS secondary care. We are giving further thought to whether the offence should also apply to other types of providers. We will consider whether, for example, there is a case for extending the offence to providers of adult social care, general practice and mental health services. We will consider this, working together with our stakeholders, and we will of course keep noble Lords informed as to our thinking as this moves forward.

[Lord Warner]

I am sorry to interrupt the noble Baroness’s flow, but could I just get her to expand a little bit on the approach on the issue I raised about protecting the employer? I was pleased to hear what she was saying about using the registration process to impose the duty of candour on the employer, but there remains the concern, which I think a number of us have, about how the employee who blows the whistle actually gets protected under the arrangements that she is talking about.

[Baroness Northover]

My noble friend says that they have protection under the NHS constitution. I hope that that clarifies it for the noble Lord but, given the time, I am happy, if necessary, to write to cover that further.

There were a number of questions, but I am well aware that time is pressing and that we are almost at the end of this part, so I will just come to one or two of them. In terms of the individual statutory liabilities in Patients First and Foremost, the Government stated that:

“before we introduce criminal sanctions at an individual level…we would want to ensure that this does not unintentionally create a culture of fear”.

The noble Baroness, Lady Finlay, spoke about that. We are, of course, waiting at the moment for the Berwick review, and no doubt we will be addressing this further in the light of it.

The noble Lord, Lord Hunt, asked about various points in relation to Francis. Francis himself made clear that many of his changes can be taken forward within the existing legislative framework and, as the noble Lord, Lord Campbell-Savours, indicated, they are, at heart, about changing behaviours in organisational cultures. The responsibility is therefore with each and every person serving patients to take action to make the changes needed.

However, we have these reviews coming forward, and we will obviously review what else we need to do. This has been an ongoing, long-standing problem, as noble Lords will be aware. I have listened to many debates in your Lordships’ House where these issues have been addressed, and people are endlessly frustrated in terms of trying to make sure that the quality and safety that you see in certain parts of the NHS is replicated in all parts of the NHS.

I am scurrying on through. If there are issues which I have not addressed, I am sure that—

[Lord Campbell-Savours]

I asked about the circumstances in which a private home took in a single National Health Service patient on a continuing care basis, paid for by the National Health Service. Does that home then come under the provisions of Clause 81? I am talking about one patient. Could that be an impediment to that home being prepared to take on NHS patients? I shall wait for the response to that.

21:45

[Baroness Northover]

The noble Lord may wish to bear in mind that his Government extended the inspection to private providers. The scope of the offence is wide enough to capture such providers, and it would first be necessary for such providers to be specified in the regulations made under Clause 81. I hope that that helps to clarify the matter for him but, if it does not, we will be happy to fill in any further details.

[Lord Campbell-Savours]

But does the noble Baroness recognise that that might then determine the policy of nursing homes concerning whether they are prepared to take on the responsibility of carrying NHS patients? They will then be chargeable with an offence which otherwise—if they were not to take on those patients—they would not be subject to.

[Lord Hunt of Kings Heath]

Perhaps I may ask my noble friend whether that then comes to the point that the noble Baroness raised earlier about needing to extend this duty to GPs and social care providers. The reality is that if the duty were extended to social care providers, most of those homes would not be viable unless they accepted either local authority-funded clients or clients from the health service. Is not the answer to extend the duty to make sure that we cover GPs, community health and so on?

[Baroness Northover]

In terms of the division that the noble Lord pointed to, if a provider decides that it does not want to take on NHS patients because it will have to reach higher standards than for private patients—which appeared to be part of what he was saying—once that is publicised and becomes apparent, that will not exactly encourage people to use those providers.

[Lord Campbell-Savours]

No. My case is that they could be prosecuted in circumstances where they might otherwise not be prosecuted because they would not fall under the provisions of Clause 81(1)(c).

[Baroness Northover]

It might be better if my noble friend answered. However, I think that it would be best if we wrote to the noble Lord and explained the detail in this regard.

Perhaps I may conclude so that we can move on. I hope that it will reassure noble Lords that the draft regulations will be available for them to consider on Report, giving full details and specifying the type of information supplied or published by providers of NHS secondary care that will fall within the offence that I have just been talking about. Regulations will, again, be subject to full parliamentary scrutiny of both Houses using the affirmative procedure. I hope that that provides reassurance to noble Lords.

The Government place great importance on ensuring that the public, regulators and commissioners have an accurate picture of a provider’s performance and can have confidence in the information supplied or published by providers.

I trust that noble Lords will find some reassurance in regard to the actions that the Government are taking, particularly on the duty of candour, the complexity of that, the importance of putting it into secondary regulations and the involvement that they may wish to have as that is taken forward. Even if I need to clarify the specific points that the noble Lord, Lord Campbell-Savours—

[Lord Campbell-Savours]

I have one other point to make. When the reply comes, it might deal with whether that provision applies only to that individual patient who is subject to NHS support, as against the balance of residents in a nursing home.

[Baroness Northover]

My noble friend says no. I can see that the van advertising litigation probably does not want to encounter the noble Lord, Lord Campbell-Savours, as he comes out of whichever hospital it is.

In the light of what I have said, and anything else that we need to clarify, I encourage noble Lords not to press their amendments.

[Lord Hunt of Kings Heath]

My Lords, we are extremely grateful to the noble Baroness for that reply. There are obviously a lot of issues that we may want to return to, but clearly the main debate is about the duty of candour. It has been a good debate because noble Lords have identified the problems of a statutory duty on individuals. This presents some real challenges, which clearly need to be thought out with great care and attention. I very much accept that there is a real risk of perverse incentives and discouraging staff doing the right thing because of the fear of prosecution.

However, I am puzzled about the duty of candour. I do not understand why the Government have included this offence of supplying false or misleading information in the Bill when the duty of candour, which is clearly much more important, will be relegated to secondary legislation. From the debate and the comments of all noble Lords who spoke, clearly this is not easy. It has to be got right. The best way to get it right is through primary legislation.

The problem with secondary legislation is that, at best, we will have an hour and a half of debate and we are not allowed to amend it. This issue is so complex and important that it warrants more. I strongly recommend that the Government to look at this again and bring back an amendment on Report in the light of Professor Donald Berwick’s recommendation. I think that they will find that the duty of candour is the flagship of the Francis report. Not to have it included in the Bill means that we are missing something. I suspect that patients will miss out in the end.

Having said that, this is a good way to conclude our discussions tonight and I beg leave to withdraw my amendment.

Amendment 73A withdrawn.

Amendment 73B not moved.

House resumed.

House adjourned at 9.52 pm.